intellectual property in uk

Intellectual property

Helen Norman

LLB 2670026 BScAccountingwithLaw/LawwithAccounting 2770411 BScManagementwithLaw/LawwithManagement 2770411

2010

This subject guide was prepared for the University of London International Programmes by:

u Helen Norman, LLB (Hons), LLM, Senior Lecturer in Law, School of Law, University of Bristol.

This is one of a series of subject guides published by the University. We regret that owing to pressure of work the author is unable to enter into any correspondence relating to, or arising from, the guide. If you have any comments on this subject guide, favourable or unfavourable, please use the form at the back of this guide.

Publications Office University of London International Programmes Stewart House 32 Russell Square London WC1B 5DN United Kingdom

www.londoninternational.ac.uk

Published by the University of London Press © University of London 2010. Printed by Central Printing Service, University of London

All rights reserved. No part of this work may be reproduced in any form, or by any means, without permission in writing from the publisher.

Intellectual property page i

Contents

1 Introduction:thechallengeofintellectualproperty 1

Introduction 2

1 1 Thechallengeofintellectualproperty 3

1 2 Essentialreading 4

1 3 Learningoutcomes,activitiesandself-assessmentquestions 5

1 4 Adviceontheexamination 6

2 Typesofintellectualproperty 9

Introduction 10

2 1 Overviewofintellectualpropertyrights 11

2 2 Theprincipalcharacteristicsofintellectualpropertyrights 14

2 3 Thetheoreticaljustificationsforintellectualpropertyrights 17

2 4 Theabsenceofprotectionforunfaircompetition 18

Reflectandreview 22

3 Sourcesofintellectualproperty 23

Introduction 24

3 1 Internationalconventions 25

3 2 UnitedKingdomlegislation 29

3 3 EuropeanUnionlegislation 30

3 4 Caselaw 35

Reflectandreview 37

4 Remedies 39

Introduction 40

4 1 Generalmatters 41

4 2 Pre-trialremedies 42

4 3 Post-trialremedies 45

4 4 Involvementofpublicbodies 48

4 5 Publicpolicyrestrictionsontherightsoftheintellectualpropertyowner 48

Reflectandreview 51

5 Breachofconfidence 53

Introduction 54

5 1 Typesofinformation:personal,commercialandstate 55

5 2 Theroleofbreachofconfidenceinintellectualpropertylaw 58

5 3 Thehistoricaldevelopmentofbreachofconfidenceandthebasisforitsprotection 59

5 4 Conditionsforprotection 59

5 5 Defences 64

5 6 Remedies:particularproblems 65

Reflectandreview 69

page ii University of London International Programmes

6 Introductiontocopyright 71

Introduction 72

6 1 ThehistoryofcopyrightprotectionintheUnitedKingdom 73

6 2 Copyrightcomparedwithotherintellectualpropertyrights 74

6 3 Thejustificationforcopyrightprotection 76

6 4 Thenatureofcopyrightandtheidea/expressiondivide 76

Reflectandreview 79

7 Subsistenceofcopyright 81

Introduction 82

7 1 Categoriesofcopyrightwork 83

7 2 Therequirementoforiginality 88

7 3 Therequirementofpermanentform 91

7 4 Qualificationforprotection 92

7 5 Authorshipandownership 93

7 6 Duration 95

Reflectandreview 97

8 Copyrightinfringementanddefences;infringementofmoralrights 99

Introduction 100

8 1 Thenatureofcopyrightinfringement 101

8 2 Primaryinfringement 104

8 3 Secondaryinfringement 107

8 4 Defencestocopyrightinfringement 108

8 5 Infringementofmoralrights 113

Reflectandreview 118

9 Designs 119

Introduction 120

9 1 Overviewofthevariousmeansofprotectingdesigns 121

9 2 Theregistrationsystem 122

9 3 Copyrightprotectionfordesigns 125

9 4 Statutoryprovisionscurtailingcopyright 126

9 5 Unregistereddesignright 129


10Introductiontotrademarks 139

Introduction 140

10 1 Thehistoryoftrademarksandtrademarklaw 141

10 2 Thenatureoftrademarks 143

10 3 Thefunctionsoftrademarks 145

10 4 ThesignificanceoftheEUTradeMarksDirectiveandtheCommunityTradeMarkRegulation 149


Intellectual property page iii

11Passingoff 153

Introduction 154

11 1 Thenatureofpassingoff 155

11 2 Theelementsofpassingoff 155

11 3 Defencestopassingoff 160

11 4 Illustrationsofthetort 161

11 5 Theforeignclaimantandwell-knownmarks 164

11 6 Thefutureofpassingoff 166


12Registrationoftrademarks 171

Introduction 172

12 1 Background:registryprocedure 173

12 2 Themeaningof‘mark’ 174

12 3 Absolutegroundsforrefusal 177

12 4 Relativegroundsforrefusal 186


13Trademarkinfringementanddefences 199

Introduction 200

13 1 Overviewoftrademarkinfringement 201

13 2 Categoriesofinfringingacts 202

13 3 Thescopeoftrademarkprotection 203

13 4 Generaldefencestoinfringement 208

13 5 Comparativeadvertising 211

13 6 Exhaustionofrights 213

13 7 Revocationandinvalidity 219


14Character,personalityandimagemerchandising;licensingoftrademarks 227

Introduction 228

14 1 Definitionofcharactermerchandising 229

14 2 Possiblemeansofobtainingprotection 229

14 3 Licensingoftrademarks 237


15Introductiontopatents 243

Introduction 244

15 1 Thehistoryofpatentlaw 245

15 2 Justificationsforpatentprotection 246

15 3 UnderstandingthePatentsAct1977 246

15 4 OutlineofUKIPOprocedure 248

15 5 Keyissuesinpatentcases 250


page iv University of London International Programmes

16Patentability 257

Introduction 258

16 1 Themeaningof‘aninvention’ 259

16 2 Excludedsubjectmatter 259

16 3 Novelty 267

16 4 Inventivestep 270

16 5 Capableofindustrialapplication 272


17Ownershipofpatentsandemployeeinventions 277

Introduction 278

17 1 Whoisaninventor? 279

17 2 Ownershipofemployeeinventions 280

17 3 Compensationforemployeeinventions 282

17 4 Dealingsinpatents 284


18Patentinfringementanddefences 287

Introduction 288

18 1 Overviewofpatentinfringement 289


18 3 Defencestoinfringement 292

18 4 Revocation 294

18 5 Interpretationofpatentclaims 295


Feedbacktoactivities 303

Contents

Introduction 2

1 1 Thechallengeofintellectualproperty 3

1 2 Essentialreading 4

1 3 Learningoutcomes,activitiesandself-assessmentquestions 5

1 4 Adviceontheexamination 6

1 Introduction: the challenge of intellectual property

University of London International Programmes

Introduction

The purpose of this subject guide is to help you study the law of intellectual property. As you work through this guide, you will gain an understanding of the law of intellectual property sufficient to do well in the final examination. This is not, however, a matter of memorising lots of information with the aim of being able simply to restate it. Each chapter will introduce and take you through a systematic programme of study. It will not give you ‘the right answer’ to be repeated, parrot fashion, in the examination. Only by following the instructions about reading and answering questions will you achieve the necessary level of understanding such that you will be able to analyse and apply the law in a lawyer-like and reasoned fashion.

Learning outcomesBy the end of this chapter and the relevant reading, you should be able to:

u appreciate why intellectual property is such a challenging yet interesting subject

u identify the necessary sources of reading for studying this subject

u begin to develop a learning strategy that will enable you to pass the examination.

Intellectual Property 1 Introduction: the challenge of intellectual property page 3

1.1 The challenge of intellectual property

Intellectual property is a relative newcomer to the law curriculum. It is perceived as being very ‘trendy’ and topical. Nevertheless, many students find it a challenging subject. Why should that be?

First, the subject itself was, for many years, regarded as being a very specialised, practitioners’ area and not necessarily appropriate for academic study. The first student textbooks only appeared in the 1980s, and there were (and still are) few academic journals in the United Kingdom devoted to the subject. Despite the fact that the subject is now well-established in the undergraduate curriculum, it remains heavily influenced by practitioners and the commercial demands of their clients. It is very litigation oriented.

Second, the principal areas of intellectual property law, namely patents, designs, copyright, trade marks and breach of confidence have surprisingly little in common with each other when examined in detail. Although they all operate to protect various forms of human creativity, the scope of each is quite different. Some are statute-based, some are derived from case-law. Each has its own discrete set of legal rules for the creation, ownership and infringement of the right in question.

Further, each area presents its own intellectual challenge to the student. In the case of copyright, although the basic principles are relatively straightforward, under United Kingdom law the rules themselves are very detailed. As a simple example, while copyright law in the United States of America (USA) has a general, flexible defence of ‘fair use’ to copyright infringement, under the United Kingdom’s Copyright, Designs and Patents Act 1988, as amended, there are over 50 separate defences to copyright infringement, each with very precise criteria. Attention to detail is therefore paramount. By contrast, in relation to designs, the law itself is complicated, with potentially five diverse means for a designer to obtain legal protection for their creative efforts. Each of these has its own criteria for obtaining protection, ownership, duration and infringement. The challenge for the student is to identify which is the appropriate method of protection, depending on the facts of the case.

Trade marks act as a means of communication between the manufacturer of goods and the ultimate consumer. Whether a particular brand name is capable of registration or whether, once registered, it has been infringed, are issues heavily dependent on the court’s view of how words and other symbols conveying messages are perceived and understood by English consumers. Those for whom English is a second language may find the fine nuances of meaning given by such signs hard to grasp. Finally, in the case of patents, the legal principles are again quite straightforward. What many students find difficult are the cases themselves. Many law students do not have scientific backgrounds and therefore believe that they will not understand the technology being discussed by the judges when deciding issues of patent validity and infringement. ‘Technofear’ gets in the way. The solution is to concentrate on the legal principles. It is not necessary to have a PhD in biotechnology to be able to understand the law of patents.

There is a further challenge which presents itself. Some of the areas covered by intellectual property, for example the tort of passing off and the action for breach of confidence, are almost entirely ‘home grown’ – that is they are products of English common law. As case-law subjects, they require students to digest a large number of judicial decisions, many of which appear to be contradictory. The remaining areas of intellectual property have been heavily influenced over the last three decades by outside forces, in the shape of conventions, both international and regional, and secondary legislation of the European Union (EU). For that reason, students need to adjust both to different legislative styles and to disparate judicial methods of interpretation. This is because key cases which explain recent legislation may be decided either by United Kingdom courts or by the EU courts, namely the European Court of Justice (ECJ) and the General Court (formerly called the Court of First Instance). Decisions relating to granting of intellectual property rights may likewise emanate from the United Kingdom Intellectual Property Office (UKIPO) (formerly called the Patent Office), the European Patent Office (EPO) or the Community Trade Mark Office (OHIM).


Last, the pace of change over the last decade has been frenetic. Apart from significant changes to intellectual property legislation, there has been a huge amount of case-law, both domestic and European. Keeping up to date is essential. For that reason, the standard advice given to law students to ensure that they buy the latest edition of a textbook is even more important. Indeed, textbooks may well become out of date almost before they are published. Do remember to check the publication date of the textbook you have purchased. There will have been significant legislative amendments and cases after its publication date. In Chapter 3, we will indicate some useful online legal databases and websites which you should consult to ensure that you stay up to date.

As with all subject guides for the LLB degree, this guide is not intended to be a substitute for reading of cases, articles and textbooks. The essential reading and exercises in each chapter should be taken seriously. Only by working through the chapters one at a time will you acquire understanding of the subject. Usually, the final examination will contain at least as many problem questions as essay questions. The only way you will be able to apply the law to new factual situations is to meet the requirements of the exercises which are set for you by this subject guide.

1.2 Essential reading

Each chapter identifies the topic to be considered and begins with a brief introduction and a statement of learning outcomes. In some instances, you will be instructed to revisit one or more of the previous chapters in this subject guide. This means that you should spend some time going over that chapter, and your notes and answers to questions, to re-acquaint yourself with that topic. It is important that you do this, as previous chapters may well form the ‘building blocks’ for key issues to be dealt with later.

Each chapter is then generally subdivided into separate sections so as to break up the information into manageable amounts. Each section will begin with ‘essential reading’. This will include pages from the recommended textbooks (see below). It will also typically list cases and relevant statutory provisions. ‘Essential’ is used to identify those materials which you must read. With regard to textbooks, the relevant passages from four textbooks are listed, and you should read the relevant passages from at least one. It is strongly advised that you buy one of these textbooks. If, however, you have good access to a library which contains one or more of them, and you are able to get hold of these texts regularly, then this may not be necessary. You should be aware that the different authors have different views and will present the material in different ways. Further, some authors concentrate on particular areas of intellectual property law when compared to the others, so none of the texts gives comprehensive coverage, and all will deal with various issues which are not on the syllabus. Some writing styles will be more accessible to you than others. None of them is best suited to all students, so, if you can, examine some of the chapters in them before deciding which, if any, to buy.

Occasionally, chapters may indicate ‘useful further reading’. These materials will broaden your knowledge of the chapter topic, but should not be attempted until you have tackled the essential reading and feel that you have a solid grasp of the subject.

The recommended textbooks are:

¢ Bently, L. and B. Sherman Intellectual Property. (Oxford: Oxford University Press, 2008) third edition [ISBN 9780199292042] (hereafter ‘Bently and Sherman’).

¢ Bainbridge, D Intellectual Property (Harlow: Longman, 2010) eighth edition [ISBN 9781408229286] (hereafter ‘Bainbridge’).

¢ Cornish, W. and D. Llewelyn Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights. (London: Sweet & Maxwell, 2007) sixth edition [ISBN 9780421919006] (hereafter ‘Cornish’). Please note, the seventh edition of this book is due to be published in 2010.

You are not required to read all these books, but should obtain and study at least one.


¢ Norman, H. Intellectual Property Directions. (Oxford: Oxford University Press, 2011) first edition [ISBN 9780199205097] (hereafter ‘Norman’). Please note, the first edition of this book is due to be published in early 2011.

You will also find an up-to-date statute book extremely useful. These are generally updated every year. Subject to the Regulations, you will be permitted to take a statute book into the examination room. The statute books for this subject are:

¢ Core Statutes on Intellectual Property (Basingstoke: Palgrave MacMillan).

¢ Blackstone’s Statutes on Intellectual Property. (Oxford: Oxford University Press).

1.3 Learning outcomes, activities and self-assessment questions

A number of ‘learning outcomes’ are listed at the beginning of each chapter. The list is meant to help you find your way through the materials, to provide a ‘route-map’. However, you should remember that understanding any particular area of law is not simply about how much factual information you can acquire. It is essential that you learn to apply that knowledge, both in the context of problem questions involving hypothetical situations, and essay questions dealing with theoretical issues. You are therefore expected to reflect on what you know, to evaluate the logic or otherwise of the legal rules which you have learned and to write critically about them. This is why many of the learning outcomes are stated in the form of ‘knowing how’ to do something or being ‘able to explain’ how the law in a particular area works.

To help you to achieve these learning outcomes, you will come across activities, self-assessment questions and sample examination questions throughout this guide. It is important that you tackle these conscientiously. Doing so will help you to remember and understand the content of the course. It will also give you practice in writing legal English and formulating arguments which will help you when it comes to the examination.

Activities (which usually have some form of feedback at the back of this guide) require you to perform a task in relation to the material you have just studied. This might involve you summarising the arguments put forward in a case or journal article (sometimes you might be asked to put forward a counter-argument) or reading two apparently contradictory cases and attempting to reconcile them. You can undertake all of these activities working alone, but – if possible – it is always useful to tackle questions with a group of fellow students, so as to promote discussion and debate. Self-assessment questions require no feedback. They are designed for you to confirm to yourself that you have identified and understood the issues which have been discussed in the text.

Sample examination questions are included at the end of most chapters. Some chapters, being essentially an introduction to a new area of the course, may contain information which is not directly examinable and so will not contain such questions. Nevertheless, do not feel tempted to skip such chapters, as they lay the foundations for what is to follow. Where chapters do contain examination questions, it is advisable that you attempt to answer each question under mock exam conditions, without consulting your notes or the text. Taking this approach will help you to develop your ability to think critically and construct an argument in limited time. It will also encourage you to identify those areas where your understanding is insufficient to enable you to demonstrate your knowledge of the subject under examination conditions.

The structure of each chapter

All the chapters follow a similar format. In general, each chapter will begin with a list of contents followed by an introduction and relevant reading. This will be followed by a list of learning outcomes. The main text will be broken into the various sub-topics, each sub-topic being prefaced by essential reading. Further, each sub-topic will normally contain activities with feedback and self-assessment questions. Each chapter will normally conclude with one or more sample examination questions with feedback.


1.4 Advice on the examination

At the end of the course you are required to sit an examination. This takes the form of a three-hour, unseen paper. You will be required to answer four questions from a total of nine. The choice is unrestricted in that there are no compulsory questions. The paper will be made up of a mixture of essay questions, problem questions and questions which may combine elements of both.

Exam technique

u Always read and carefully follow all instructions on the front page of the examination book.

u Read all the questions carefully. Ensure that you understand what each question is about and identify those you are going to attempt and those you are not. Where a question is divided into parts, check carefully whether you are expected to answer each part or whether you are required to answer some but not all parts.

u Do a plan for each question you intend to answer and stick to that plan.

u Use your time wisely (this is why doing a plan helps). If you fail to answer the correct number of questions you are depriving yourself of vital marks. It’s no good spending an hour each on your first two answers, 45 minutes on the third and 15 minutes on the fourth.

Remember what the Examiner is looking for: s/he does not want to know that you can repeat your notes like a parrot nor how many case names you can remember. Essentially, law exams seek to test your understanding of the law and your legal reasoning, so the key skills you require (apart from remembering the basic principles) are those of analysis and application. Analysis means that you have looked carefully at the wording of the question (whether it is an essay or a problem) and considered what issues the question raises. Application means that you attempt to ‘map’ the legal principles on to the facts of the problem or the issues raised by an essay, so that you can identify the similarities and differences and, most importantly, the ‘grey’ areas of law, to which you should be able to apply your reasoning skills.

Above all, answer the question which has been asked, not the one you wish had been asked. With essay questions, remember that the Examiner will never say ‘write all you know on topic x’. Often there will be a statement or a quotation, which will contain certain ‘flags’. Such words contain hidden assumptions or value judgments which the Examiner is inviting you to challenge (or at least make use of in selecting the material you are going to discuss). Simply repeating your notes (or what is even worse, producing a pre-prepared answer to a question you hope is going to be on the paper) will not obtain a pass mark. Remember that Examiners are not fooled by an answer which has an introductory paragraph indicating that a serious answer to the question is to be proffered and a grand-sounding conclusion purporting to pull together a range of diverse arguments, if the middle section of the essay is merely a regurgitation of the student’s notes.

Equally, with problem questions, a common failing is to assume that in order to pass it is sufficient merely to identify the relevant area of law and to set out the rules. As indicated above, the key skills are those of analysis and application. Many candidates fail to analyse the facts and/or apply the law to the facts and/or they come to a conclusion which is at odds with what has gone before. Although in some ways the conclusion is the least important, if you have one make sure it is logical. Also, do not give your conclusion at the start of your answer – as you work through your answer plan, you may realise that there are alternative arguments and if you give your conclusion too soon you may be depriving yourself of marks. Don’t be afraid to indicate that there could be alternative conclusions. Conversely, be wary of trying to invent facts – the question may well require you to identify whether further information is required (e.g. whether one of the characters is or is not an employee) but do stick to the facts as given and don’t ‘embroider’ by adding facts which clearly aren’t there – doing so may make the Examiner suspect that you haven’t understood the law and/or the question.

You should note that not every topic can or will be examined in any one year and you should not regard a particular topic as being ‘guaranteed’ to appear on the paper.


You are allowed to take a statute book into the examination. It is vital, therefore, that you know your way around the statutes: it’s a complete waste of time taking a statute book into the exam if you haven’t looked at it before. Also, remember that marks are not awarded for merely copying out the wording of a piece of legislation. You should therefore aim to use your statute book as a reminder. Each of the principal statutes (the Patents Act, the Trade Marks Act, the Copyright, Designs and Patents Act) can be used as a framework for your answer, particularly for problem questions. You should try to ensure that you know where the key provisions are in each statute relating to:

u criteria for protection

u infringement

u defences

u remedies.

Finally, remember to write legibly. Papers which are illegible may not be marked. Many people today find that they can write less quickly than they can type, so it is a good idea to write out your answers to the sample examination questions. This will also be a valuable exercise with regard to time management in the examination. In the examination, you need to be extremely self-disciplined – it is far better to go back to an answer to add extra material, rather than only half-finish your last answer or, even worse, fail to answer a fourth question entirely due to lack of time.


Notes

Contents

Introduction 10

2 1 Overviewofintellectualpropertyrights 11

2 2 Theprincipalcharacteristicsofintellectualpropertyrights 14

2 3 Thetheoreticaljustificationsforintellectualpropertyrights 17

2 4 Theabsenceofprotectionforunfaircompetition 18

Reflectandreview 22

2 Types of intellectual property


Introduction

The purpose of this chapter is to set out the various categories of intellectual property rights which are recognised by United Kingdom law. You should not worry at this stage about the specific rules for the existence and infringement of such rights, as these issues will be dealt with in more detail in later chapters. Rather, you should concentrate on trying to understand the purpose of each type of right and the subject matter which it protects. It is important that you are able, at an early stage of your studies, to distinguish clearly between the various types of right, as each is quite different. Each right has its own unique rules for creation, infringement and ownership, although it is possible for one set of facts to give rise to several rights. Knowing which right is relevant is crucial to enable you to select the appropriate statutory provisions and supporting case-law when answering questions.

In addition, this chapter will introduce you to some of the recurring themes in intellectual property. We shall examine the main characteristics of intellectual property rights, in particular the fact that they give rise to monopolies. If (as economic theory assumes) monopolies are bad, why then are intellectual property rights allowed – indeed, encouraged? Further, how is the balance to be struck between the interests of society in having free competition and the interests of the creator in being rewarded for his/her efforts? You should pay particular attention to the subject matter of each type of intellectual property right and their general characteristics.


u list the principal types of intellectual property rights and describe in general terms the key features of each of them

u set out the principal characteristics of all intellectual property rights

u explain the reasons which are put forward to justify the existence of intellectual property rights

u explain what is meant by the term ‘unfair competition’ and why United Kingdom courts have traditionally refused to recognise this as a separate form of harm

u define: patent, copyright, design, trade mark and confidential information.

Intellectual property 2 Types of intellectual property page 11

2.1 Overview of intellectual property rights

Essential reading ¢ Norman, Chapter 1: ‘General Introduction’, section 1.2.

¢ Bainbridge, Chapter 1: ‘Introduction’, pp.3–10.

Patents

A patent is concerned with applied technology, that is with how things work, not with abstract ideas. The subject matter of a patent, called an invention, can be either a product (a tangible item) or a process (a method of making something or a means of using something). The criteria for patentability are that the invention must be new, contain an ‘inventive step’, be capable of industrial application and must not fall within the statutory list of excluded subject matter. To determine whether an invention is new and has an inventive step, it is compared with all information which is available to the public at the date the application is made. This information is called ‘the prior art’. A patent is granted by the United Kingdom Intellectual Property Office (throughout this guide, ‘UKIPO’) for a maximum period of 20 years (calculated from the date on which the application was made) and confers on its owner (called the patentee) an exclusive right to make, offer, dispose of, keep or use the product, or to use or offer the process which is the subject matter of the patent. If another person infringes a patent, the fact that they created the same invention independently is not a defence. Under United Kingdom law, the relevant legislation is the Patents Act 1977, as amended.

Copyright

Copyright is the right to stop the copying and distribution of certain categories of ‘work’. Examples of items which are potential copyright works are books, plays, music, paintings, films, sound recordings and broadcasts. Do not assume, however, that copyright law in the United Kingdom protects only those works which are the result of great creativity. The threshold for protection is very low, so that everyday items (such as lists of TV programmes) are protected. To qualify for protection, the work must be original (meaning ‘not copied’), be recorded in a permanent form and the author must be a qualifying person. Unlike other statute-based forms of intellectual property, copyright protection does not depend on registration but arises automatically once the work is created. Copyright protection lasts for a long time, generally speaking for the lifetime of the author plus 70 years. The copyright owner has the exclusive right to stop anyone else from reproducing the work (that is, copying it), issuing copies of the work (including renting out copies), performing the work in public, communicating the work to the public (whether by broadcast or the internet) or adapting the work. They also have the right to stop anyone else from dealing in infringing copies of the work by way of trade. However, to succeed in a copyright infringement action, the owner has to prove that the defendant copied the work. Independent creation is therefore always a defence to copyright infringement. Under United Kingdom law, the relevant legislation is the Copyright, Designs and Patents Act 1988 (throughout this guide, ‘CDPA’).

Designs

The law of designs is concerned with the appearance of products, that is, with how things look. In design law, what is protected is not the underlying article (which may be an everyday item such as a tea-pot), but the design features which have been applied to it. Under United Kingdom law, a designer may have up to three means of legal protection for their design, depending on the facts: registered design protection, unregistered design right or copyright (two further means of protection are available under EU law).

In the case of registered designs, the criteria for protection are that the design must be new and have ‘individual character’, which means that it must produce on the informed user (that is, a potential customer but not necessarily a consumer of the product) an overall impression which is different from that of previous designs. A registered design is granted by the Designs Registry (part of UKIPO) and lasts for a


maximum of 25 years, calculated from the application date, subject to the payment of five-yearly renewal fees. It confers on its owner the exclusive right to prevent anyone else from using the design on any product: from making, offering, putting on the market, importing, exporting, using or stocking a product in which the design is incorporated or to which it is applied. As with patent protection, independent creation is not a defence to a claim for registered design infringement. The relevant legislation is the Registered Designs Act 1949, as amended.

For some industries, especially those in which the design of products changes rapidly, the formality and delays inherent in a registration system are felt to be inappropriate. The alternative means of protection is the unregistered design right. This is a copyright-type right to protect the shape or configuration of the whole or part of an article. The right arises automatically, without the need for registration, once the design has been created. The criteria for protection are that the design must be original (in the copyright sense), not commonplace and recorded in a design document. The duration of protection, however, is much shorter than copyright, with a maximum period of protection of 15 years from creation, reduced further to 10 years from first marketing if articles bearing the design are sold anywhere in the world within five years of the design having been created. The design right owner has the exclusive right to stop anyone else from reproducing the design (that is, copying it) by making articles to it for commercial purposes, and the right to stop anyone else dealing in infringing copies of the design by way of trade. To succeed in a design right infringement action, the owner has to prove that the defendant copied the work, so that independent creation is a defence to design right infringement, just as it is to copyright infringement. The relevant legislation is Part III of the CDPA.

Lastly, a designer may still, in certain limited circumstances, be able to claim copyright protection for the appearance of an article. This is where the article is an artistic work in its own right, for example, a work of artistic craftsmanship, such as hand-carved furniture or a sculpture. The criteria for protection and the scope of protection are the same as for copyright above. The only difference is that if the artistic work has been the subject of mass-production (that is, more than 50 copies of it have been made industrially), then the duration of copyright protection is curtailed to 25 years.

Trade marks

A trade mark is a sign or symbol used in the course of trade to indicate the origin of goods or services. It is an integral part of the consumer society, enabling customers to distinguish one product from another and to choose between competing brands, returning to those which have given satisfaction and avoiding those which have not. There are two legal routes to protecting a trade mark: by registration or by means of an action in tort for passing off.

In the case of registered trade marks, the criteria for protection are that the sign must be capable of graphic representation and capable of distinguishing the goods or services of one undertaking from those of another. It must not fall within the list of absolute grounds for refusal (that is, objections which relate to the inherent nature of the mark itself), nor must it fall within any of the relative grounds for refusal (that is, it must not conflict with any prior rights). Once registered (registration being granted by the Trade Marks Registry, again part of UKIPO), it is capable of lasting indefinitely. This is subject only to the payment of renewal fees every 10 years. Registration does not mean that the mark is safe from counter-attack: where the proprietor has failed to look after the mark, they may have made it vulnerable to an action for revocation by a third party. Registration gives the proprietor the exclusive right to prevent others from using the same or similar sign in the course of trade in relation to the same or similar goods (or, in some instances, dissimilar goods) for which the mark is registered. The relevant legislation is the Trade Marks Act 1994.

Passing off

However, it is not compulsory for a trader to obtain registration for any brand name they may wish to use in the course of trade. Alternative protection for unregistered


trade marks (sometimes called ‘common law’ trade marks) is available through the tort of passing off. Passing off is entirely judge-made law. At times the cases appear to be contradictory (as will be discussed in Chapter 11). The inconsistencies may in part be explained by the fact that passing off is highly dependent on the circumstances of each case and on the quality of evidence put forward by the claimant. It is generally accepted that the ingredients of passing off are as stated by Lord Oliver in Reckitt & Colman v Borden (JIF LEMON) [1990] 1 WLR 491 (HL). To be successful, the claimant must prove that:

u his name, trade mark, logo or other visual symbol has, through use, acquired a reputation which has generated business goodwill

u the defendant, by using this symbol, has made a misrepresentation in the course of trade to customers that his goods or services are in some way ‘connected with’ the claimant

u the claimant has suffered or will suffer damage to his business goodwill as a result.

The onus is on the claimant to prove each element of the definition. If any one of these ingredients is missing, the passing off action will fail. This may help to explain why registering a trade mark is preferable to relying on the lottery of the passing off action.

Confidential information

The action for breach of confidence is the means of protecting trade secrets. The action for breach of confidence can also be used to protect personal and state information. It is the one area of intellectual property law which can provide protection for ideas themselves. The action for breach of confidence does not depend on statute, but on case-law. The accepted requirements for the action (established by Megarry J in Coco v Clark [1969] RPC 41) are that the successful claimant must prove that:

u there existed confidential information

u the defendant owed the claimant a duty of confidence (which may be inferred from the circumstances, such as the parties being in a joint venture)

u breach of that duty by the misuse or wrongful disclosure of that information by the defendant.

If, however, the information or idea is known to the public (‘in the public domain’) then it is incapable of protection.

Activity 2.1Complete this table to compare the various kinds of intellectual property right.

RightWhatis

covered?

Methodofregistration

(ifany)

Durationofprotection

Is‘independentcreation’adefence?

Patent

Copyright

Design (registered)

Design (unregistered)

Design (artistic work)

Trade mark

Confidential information

No feedback provided.


Self-assessment questionsGive a description of each of the following.

1. A patent.

2. Copyright.

3. A design.

4. A trade mark.

5. Confidential information.

Activity 2.2Household Appliances Ltd is a leading manufacturer of consumer goods. The company is about to launch a new kettle. The kettle is to be called the HOTTA and has an unusual shape. The kettle is more efficient in heating water and is safer for consumers to use, because when boiled it remains cool to touch. The reason for these two advantages is that instead of having a single wall, the kettle has a double wall, the gap between the two layers of metal being filled with a special gas. Because of the special properties of the gas, safety legislation obliges the company to supply a detailed instruction leaflet when selling the kettle. The gas is obtainable only from certain specialist suppliers and the company is concerned in case its competitors learn who these suppliers are. Identify which categories of intellectual property protection should be considered by the company.

SummaryThe principal categories of intellectual property rights are patents, copyright, designs, trade marks and confidential information. Each protects different aspects of information. Patents protect inventions, copyright protects works, designs are concerned with the appearance of products and trade marks with brand names and other signs used in the course of trade. Confidential information protects trade secrets. Protection for patents, designs and trade marks is normally obtained by means of registration, while copyright arises automatically on the act of creation. Most forms of protection are statute-based, but common law protection for trade marks and the protection of confidential information is the result of case-law.

2.2 The principal characteristics of intellectual property rights

Essential reading ¢ Cornish, Chapter 1: ‘Starting Points’ paras 1-40 to 1-47.

¢ Norman, Chapter 1: ‘General Introduction’ section 1.4

2.2.1 Property rightsIntellectual property rights are, naturally, proprietary in nature. They can be bought and sold, mortgaged and licensed just like any other type of property. A valuation can be put on them for contractual or accounting purposes. Nevertheless, it is very important to be able to distinguish between the property rights which exist in a tangible item and the intangible intellectual property rights which may be embodied in that item. For example, if A writes a letter to B, the piece of paper received by B will belong to B as it was intended as a gift by the sender. However, the copyright in the words contained in the letter will belong to the creator, A. Further, A may use a pen to write the letter. The pen will be A’s personal property, but there may well be a patent for the pen belonging to C Ltd, or perhaps, if the pen is of an unusual shape, C Ltd might own a design right in respect of the pen. The fact that there are intellectual property rights over the pen does not prevent the use or ownership of the tangible item by A, just as A’s ownership of copyright in the letter does not affect B’s ownership of the piece of paper on which the letter is written. However, were B to attempt to do


something falling within the scope of A’s copyright (such as to copy the letter or to include it in his autobiography which is about to be published in a newspaper) then A’s copyright may well (depending on the circumstances) be infringed.

2.2.2 Territorial natureIntellectual property rights are territorial in nature, that is, they arise as a result of national legislation which authorises an official ‘grant’ of the right by a national intellectual property office. In the case of copyright, which does not depend on registration, the ‘grant’ of the right by United Kingdom law is automatic, providing the conditions in the CDPA are fulfilled. For actions in passing off or breach of confidence, the ‘grant’ of the right is as a result of a judicial decision in favour of the claimant.

This territorial nature means that an intellectual property right is only effective in the territory of the state granting that right. As an example, a patent granted by UKIPO only has effect for the territory of the United Kingdom. It does not give the patentee any rights outside the United Kingdom and can only be infringed by conduct which occurs within the territory of the United Kingdom.

There are various consequences of this proposition. First, where protection is required for a patent or trade mark or registered design in more than one country, it is necessary to obtain separate registration for that right in each country. It should be noted that various international conventions exist which assist an applicant to make multiple simultaneous applications in several countries (you do not need to know the detail of these conventions, just be aware that they exist). Also, one of the developments of EU law has been the creation of pan-European rights, so that it now possible to obtain a single registration for a trade mark or a design which is effective in all 27 Member States of the EU (again, you do not need to worry about the details of the EU trade mark or the EU design).

Next, the content of a particular intellectual property right may vary from country to country. Despite the existence of various international conventions which have attempted to standardise intellectual property laws, differences do exist between the laws of the Contracting States. These differences may relate to the detailed rules of a particular intellectual property right, or to the legal systems within which the right is enforced, or to the social and cultural values which that legal system seeks to uphold.

One final consequence of the territorial nature of intellectual property rights will be mentioned briefly at this stage, although it will be dealt with in much more detail in Chapter 13. The various statutory provisions setting out what conduct infringes intellectual property rights (for example, the Trade Marks Act 1994 section 10(4)(c)) entitle the proprietor to prohibit the importation of goods (there are similar provisions for patents, designs and copyright). Staying with trade marks as our example (because almost all the case-law involves trade marks), what if trade marked goods have been sold by the trade mark owner itself in another country? Does the United Kingdom registration entitle the trade mark owner to sue the importer for infringement, so as to keep legitimate (rather than pirated) goods out of the country? This would enable the trade mark owner to protect their United Kingdom distributors from price competition, as the importer may well have acquired the branded goods more cheaply elsewhere. The answer is, it depends. If the trade mark owner first sold the goods in a Contracting State of the European Economic Area (EEA) (which consists of the 27 EU Member States plus Iceland, Norway and Liechtenstein) then EU law provides that the trade mark owner’s rights are exhausted or spent. No objection can be made to further dealing in these parallel imports (as they are called) within the EEA unless the importer does something to undermine the value of the trade mark. However, if the goods were first sold by the United Kingdom trade mark owner outside the EEA territory (for example in the USA), then under EU law the principle of exhaustion of rights does not apply, and national trade mark rights enable the owner to sue for trade mark infringement (see Case C-414/99 Zino Davidoff SA v A & G Imports Ltd [2001] ECR I-8691). National trade mark rights can therefore be used to prevent parallel imports of non-EEA goods.

For this reason, it is very important that any materials you read beyond the recommended reading in this subject guide relate to United Kingdom law and not the law of another legal system.


2.2.3 Monopolistic natureYou may have noticed that the descriptions of the various categories of intellectual property rights given in section 2.1 above used the phrase ‘exclusive right’. This phrase embodies two important concepts. First, that intellectual property rights are negative in nature, because the owner is given the right to exclude others. To go back to the example in section 2.2.1, A’s copyright in the letter written to B does not give A any positive rights of ownership over the physical medium of the piece of paper. Rather, it gives A the right to prevent B (or anyone else) from infringing any one of the particular rights conferred on the copyright owner by statute, for example, the right to stop the letter being copied or communicated to the public. Second, the phrase ‘exclusive right’ means that the owner of the intellectual property right is the only person who can exploit the right. So, for example, in the case of a patent, the patentee is the only person who can make the patented product, offer it for sale, dispose of it, keep it or use it by way of trade. In the case of a registered trade mark, the owner is the only person who can apply the mark to goods, sell goods bearing the mark, import or export the goods, or advertise goods bearing the mark. In other words, an intellectual property right gives rise to a legal monopoly.

Whether monopolies are good or bad is the subject of much debate among economists. It is beyond the scope of this subject guide. Nevertheless, at common law, since the case of Darcy v Allin (Case of Monopolies) (1602) 11 Co Rep 84b all monopolies are viewed as contrary to public policy. This was confirmed by Parliament in the Statute of Monopolies 1623, to which patents are declared to be an exception by section 6. As your studies progress, you will come across decisions where the judges have been reluctant to find in favour of the claimant on the ground that this would create an ‘unfair monopoly’ (see, for example, the decision of the House of Lords in Re COCA COLA Trade Marks [1986] RPC 421). Instead, United Kingdom courts have always favoured free competition (see Crofter Hand Woven Harris Tweed v Veitch [1942] AC 435) which may explain why at times the Patents Court gives the impression of being against intellectual property owners.

Present day intellectual property legislation contains many built-in safeguards to ensure that a balance is struck between the rights of the intellectual property owner and free competition. Some of these safeguards require the owner to pay renewal fees regularly (in the case of patents, registered designs and trade marks). Others require the owner to make effective use of the intellectual property right: hence failure to exploit a patent may result in compulsory licensing and failure to use a trade mark for more than five years means that the registration may be revoked at the instance of any third party. In the case of copyright and designs, the competition authorities may intervene where the owner has abused the right. With the exception of trade marks, all intellectual property rights are of finite duration. Finally, in the case of all registered intellectual property rights, statute provides for the right to be declared invalid in certain instances, so unlike real property and tangible personal property, intellectual property rights are always vulnerable to challenge by third parties.

SummaryThe three principal characteristics of intellectual property rights are that they create intangible rights of property, that they are territorial in nature and that they confer exclusivity. The intangible rights accorded to the intellectual property owner must be kept separate from the ownership of the physical medium in which those rights are embodied. Territoriality means that intellectual property rights are confined in their effect to the state which has ‘granted’ that right. Exclusivity means that the owner of the right can prevent others from certain types of conduct and that they are the only person who can do this for the duration of the right concerned.


Reminder of learning outcomesBy this stage you should be able to:

u list the principal types of intellectual property rights and describe in general terms the key features of each one of them

u set out the principal characteristics of all intellectual property rights.

2.3 The theoretical justifications for intellectual property rights

Essential reading ¢ Bently and Sherman, Chapter 1: ‘Introduction’ pp.3–5

¢ Norman, Chapter 1: ‘General Introduction’ section 1.5.

¢ Jacob, Sir R. ‘The Stephen Stewart Memorial Lecture: Industrial Property – Industry’s Enemy’ [1997] IPQ 3.

¢ Libling, D.F. ‘The Concept of Property: Property in Intangibles’ (1978) 94 LQR 103.

¢ Spence, M. ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 LQR 472.

Intellectual property rights involve protecting the product of the intellect. Ultimately, therefore, they protect information. Assuming that property rights over real and personal property can themselves be justified (and certain philosophies deny this), is it correct to treat information in the same way? Should information be the subject of private rights or should it be regarded as public property – what John Locke referred to as ‘the commons’? Further, if private property rights are allowed to exist over information, what safeguards should be created to ensure the protection of the public interest in such information, so that enough of ‘the commons’ is left for others to enjoy?

Many reasons have been advanced in academic literature as to why there should be private rights of ownership in intellectual property. Such reasons are not often articulated in United Kingdom case-law (although for an exception, see Dranez Anstalt v Hayek [2003] FSR 561 at para 25). Reasons which are advanced include: that one should not steal what belongs to another (which assumes that ideas are property); that a person should be entitled to own the product of the intellect just as much as they might own a piece of furniture they have carved from a tree (this argument is derived from the writings of John Locke); or that it is in society’s interests either to reward those who are inventive, or else to provide incentives to creativity, as this will in the long term improve everyone’s standard of living (these arguments owe much to the writings of Jeremy Bentham and are called ‘utilitarianism’).

Attractive though some of this reasoning is, there is no scientific proof that a society with intellectual property protection is any better or worse than a society without it. If intellectual property rights are accepted as valid, however, one would expect that the protection which they confer on their owners should perhaps reflect the justifications for such rights. Regrettably, the law does not distinguish between ‘good’ and ‘bad’ intellectual property rights. There is no difference in the protection accorded to a patent for a new life-saving drug and one for a very minor modification to the internal combustion engine. The composer of a great choral work receives no better protection than does the person who writes a ‘jingle’ for a television advertisement.

Finally, if intellectual property rights are accepted as beneficial to society, because they confer monopoly power, there remains the question of how to strike the balance between the interests of the owner and the interests of society. Should the task of striking this balance fall to the discretion of the judges, should it be built in to the legislation creating the intellectual property rights, or should it be left to those with authority to administer competition law? Either way, as Sir Robin Jacob has argued very forcefully, intellectual property rights continue to expand and strengthen, with little attention being paid to protecting the interests of others.


Activities 2.3–2.42.3 Read the article by Sir Robin Jacob (listed above). What are his concerns

about current trends in intellectual property? What examples does he give of intellectual property ‘getting out of hand’?


2.4 What arguments have been advanced to justify the recognition of intellectual property rights? Which of these do you find most convincing? Is it possible to defend the existence of all intellectual property rights by the use of a single argument or does each type of right require a different justification?

Useful further reading ¢ Ricketson, S. ‘Reaping without Sowing’: Unfair Competition and Intellectual

Property Rights in Anglo Australian Law (1984) 7 UNSWLJ 1.

SummaryIntellectual property rights are justified by a number of different philosophical and economic arguments. These arguments are not often considered by the courts when deciding intellectual property litigation, nor by legislators when creating new rights. The value of intellectual property rights to society is often a matter of assertion and almost impossible to prove scientifically.

2.4 The absence of protection for unfair competition

Essential reading ¢ Cornish, Chapter 1: ‘Introduction’ paras 1-12 to 1-22.

¢ Norman, Chapter 1: ‘General Introduction’ section 1.3.

¢ Cases: Victoria Park Racing v Taylor (1937) 58 CLR 479 (Aust HC); Moorgate Tobacco v Philip Morris [1985] RPC 219, especially pp.235–40; Erven Warnink BV v Townend & Sons [1979] AC 731; Cadbury-Schweppes v Pub Squash Co. [1981] RPC 429 (read only Lord Scarman at pp.486–97); Irvine v Talksport [2002] 2 All ER 414 (Patents Court); Arsenal Football Club v Matthew Reed [2003] 2 CMLR 800 (CA); L’Oréal SA v Bellure NV [2008] RPC 196 (CA); Case C-487/07 L’Oréal SA v Bellure NV, 18 June 2009 (ECJ); L’Oreal SA v Bellure NV, [2010] EWCA Civ 535.

The Paris Convention for the Protection of Industrial Property 1883 (explained further in Chapter 3) contains in Article 10bis an obligation for its Contracting States to provide effective redress against unfair competition. ‘Unfair competition’ is defined as being ‘any act of competition contrary to honest practices in industrial or commercial matters’. To put this another way, it is conduct which, whilst not amounting to infringement of a specific intellectual property right, involves taking advantage of or benefiting from the effort, skill and investment of another enterprise in such a way as to affect that enterprise’s ability to compete. It may be conveniently, if emotively, described as ‘free riding’ or ‘reaping without sowing’. Article 10bis gives a non-exhaustive list of examples, including creating confusion with the activities of a competitor, making false allegations in the course of trade such as to discredit a competitor and misleading the public as to the nature of goods. More recently, in the context of defences to trade mark infringement, the ECJ has re-phrased the concept of unfair competition as involving ‘the duty to act fairly in relation to the legitimate interests of the trade mark proprietor’ (Case C-100/02 Gerolsteiner Brunnen GmbH v Putsch GmbH [2004] ECR I-691). Many other EU Member States, for example France and Germany, have a specific law against unfair competition.

As mentioned in section 2.2.3 above, United Kingdom courts have traditionally adopted a robust view of competition, such that any form of business conduct is regarded as fair provided that it does not amount to criminal conduct (Crofter Hand Woven Harris Tweed v Veitch [1942] AC 435). Consequently, United Kingdom law (and


indeed the law of several other common law jurisdictions) has no general concept of unfair competition. Instead, intellectual property is divided into the discrete rights listed above. Where a claimant seeks protection for something falling outside such categories, the action is likely to fail unless an existing right can be ‘stretched’ to fit. The judiciary are reluctant to expand the boundaries of the existing rights.

This approach may be compared with that of the US Supreme Court in the case of International News Service v Associated Press (1918) 248 US 215 (discussed in the Libling article above), where the majority of the court held that taking news stories of the First World War collected by the claimants and telegraphing them to the West Coast of the USA in order to publish the news there first, before the claimants’ own newspapers could do so, amounted to an act of unfair competition. You should note, however, that there are two very powerful dissenting judgments in the case, and the case has since been much criticised.

In the United Kingdom, copyright and passing off are the categories of intellectual property most likely to be utilised in an attempt to provide protection against unfair competition. It is possible to identify cases where the judges seem more willing to expand the boundaries of protection. Such cases include Erven Warnink BV v Townend & Sons [1979] AC 731 and Irvine v Talksport [2002] 2 All ER 414. Equally, there are cases where the judges are of the view that existing forms of redress should not be expanded to encompass unfair competition. Such an instance is the decision of the Privy Council in Cadbury-Schweppes v Pub Squash Co. [1981] RPC 429.

There continues to be a division of judicial opinion as to how the law ought to develop. At national level, Aldous LJ has suggested that passing off ought to be regarded as unfair competition in BT plc v One in a Million [1999] FSR 1 at p18 and Arsenal Football Club v Matthew Reed [2003] RPC 696 at [70]. On the other hand, Jacob J in Hodgkinson & Corby v Wards Mobility Service [1995] FSR 169 stated that there is no tort of taking a competitor’s customers. As between national courts and the ECJ, there is a similar division of opinion. In L’Oréal SA v Bellure NV [2008] RPC 196 at [141] Jacob LJ declared that free competition was ‘the mainspring of the economy’. By contrast, when this case was considered by the ECJ (Case C-487/07 L’Oréal SA v Bellure NV, 18 June 2009), that Court stated there could be liability for taking unfair advantage of another’s trade mark. When the case returned to the Court of Appeal, Jacob LJ expressed his reluctance to agree with the ECJ.

Activities 2.5–2.82.5 Read the judgments in Victoria Park Racing v Taylor and Moorgate Tobacco v

Philip Morris. Do you agree with the conclusions of the judges? What do the cases tell you about the attitude of the common law towards fair and unfair competition?

2.6 Read the opinions of Lord Diplock in Erven Warnink BV v Townend & Sons and Lord Scarman in Cadbury-Schweppes v Pub Squash Co. Is it possible to reconcile their views on how intellectual property law should respond to changing business practices?

2.7 Would United Kingdom law benefit from the introduction of protection against unfair competition? Would the doctrine of misappropriation be a better means of protecting the interests of traders? Or is the law of passing off, as applied in Irvine v Talksport, sufficiently flexible to prevent unfair trading?

2.8 Read the two judgments of the Court of Appeal and that of the ECJ in L’Oréal SA v Bellure NV and then write a concise summary of the differences between their respective views on ‘free riding’ (not more than 300 words).

No feedback provided for 2.5 and 2.8.

Useful further reading ¢ International News Service v Associated Press (1918) 248 US 215.

¢ Carty, H. ‘The Common Law and the Quest for the IP Effect’ [2007] IPQ 237.



u explain the reasons which are put forward to justify the existence of intellectual property rights

u explain what is meant by the term ‘unfair competition’ and why United Kingdom courts have traditionally refused to recognise this as a separate form of harm

u define: patent, copyright, design, trade mark and confidential information.

Sample examination questionsThe topics covered in this chapter can often be the subject of general essay questions in the examination. At this stage of your studies, you are unlikely to feel confident in tackling such questions. We recommend that you return to this Chapter and attempt the questions set out below once you have worked your way through the subject guide.

Question 1 ‘The continued expansion of intellectual property rights in the age of the information economy is to be deplored.’

Discuss.

Question 2 ‘There is no need to introduce a separate law of unfair competition. The actions for breach of confidence and passing off are more than adequate.’

Discuss.

Advice on answering the questionsQuestion 1 This essay question invites you to take sides, and to debate whether intellectual property rights should continue to expand in the information age. There are several key words and phrases, such as ‘expansion’, ‘information economy’ and ‘deplored’, which contain value judgments: these should be challenged. The good answer would therefore consider whether expansion is a bad thing, whether it is inevitable, and how intellectual property should adapt to deal with the impact of digital technology. If information can be distributed so easily, should it ‘belong’ to anyone or everyone? If images can be sent around the world so easily via the internet, should celebrities be given any control over the use of photographs, whether via privacy or a personality right? The sub-text of the question is therefore the various justifications for intellectual property and whether they work in the 21st century. There are a number of areas which can be chosen to illustrate these arguments (beware that assertion and opinion are not enough, they should be justified). Should copyright owners be given additional rights (as under the Information Society Directive)? Was the EU right to create the Database Directive? Should computer programs and computer implemented inventions be patentable or would this stifle competition? Should the protection conferred on trade mark owners be broadened? Most textbooks contain references to articles which can be cited in support of these points.

Question 2 A good answer would begin with a definition of unfair competition, as set out in Article 10bis of the Paris Convention (behaviour which is ‘contrary to honest practices in industrial and commercial matters’), and would mention the three non-exhaustive examples given in the Article of what amounts to unfair competition. It would go on to consider how United Kingdom law does not recognise an action for unfair competition and to give reasons as to why this might be. It could be argued (for example) that intellectual property is divided into discrete rights, which judges are generally reluctant to expand (see dicta in Victoria Park Racing v Taylor and Moorgate Tobacco v Philip Morris) or that since the Statute of Monopolies 1623, any monopoly is contrary to common law and so intellectual property rights are a narrow exception to that principle. A contrast could be made with the position in the USA, where the Supreme Court accepted that there could be an action to protect a business against the misappropriation of its investment by a rival in International News Service v Associated Press. Cases should be identified where United Kingdom judges seem


willing to expand the boundaries of existing IP rights (for example, Lord Diplock in Erven Warnink BV v Townend & Sons or Laddie J in Irvine v Talksport), even though there are other cases where judges have maintained that strict rules should be maintained, so that just because the defendant’s conduct amounts to unfair trading (‘free riding’) does not entitle the claimant to a remedy (see Lord Scarman in Cadbury-Schweppes v Pub Squash Co). Equally, there are now examples where United Kingdom courts appear to be at odds with the ECJ over the issue of ‘taking unfair advantage’ of another trader’s investment (see L’Oréal SA v Bellure NV discussed above). Having established this as a starting point, the good answer would have referred to some of the extensive literature which has argued for and against the introduction of an action for unfair competition, or at the very least, for better protection against the misappropriation of investment. The good answer would have concluded by a selective use of cases from passing off or breach of confidence in support of an argument for or against having a tort of unfair competition.


Reflect and review

Look through the points listed below:

Are you ready to move on to the next chapter?

Ready to move on = I am satisfied that I have sufficient understanding of the principles outlined in this chapter to enable me to go on to the next chapter.

Need to revise first = There are one or two areas I am unsure about and need to revise before I go on to the next chapter.

Need to study again = I found many or all of the principles outlined in this chapter very difficult and need to go over them again before I move on.

Tick a box for each topic. Ready to move on

Need to revise first

Need to study again

I can list the principal types of intellectual property rights and describe in general terms the key features of each of them.

¢

¢

¢

I can set out the principal characteristics of all intellectual property rights.

¢

¢

¢

I can explain the reasons which are put forward to justify the existence of intellectual property rights.

¢

¢

¢

I can explain what is meant by the term ‘unfair competition’ and why United Kingdom courts have traditionally refused to recognise this as a separate form of harm.

¢

¢

¢

I can define the following: patent, copyright, design, trade mark and confidential information.

¢

¢

¢

If you ticked ‘need to revise first’, which sections of the chapter are you going to revise?

Must revise

Revision done

2.1 Overview of intellectual property rights ¢ ¢

2.2 The principal characteristics of intellectual property rights

¢ ¢

2.3 The theoretical justifications for intellectual property rights

¢ ¢

2.4 The absence of protection for unfair competition ¢ ¢

Contents

Introduction 24

3 1 Internationalconventions 25

3 2 UnitedKingdomlegislation 29

3 3 EuropeanUnionlegislation 30

3 4 Caselaw 35

Reflectandreview 37

3 Sources of intellectual property


Introduction

The purpose of this chapter is to set out the various sources of intellectual property law in the United Kingdom. It will show that the influences on United Kingdom domestic law are many and diverse, and that lawyers working in this field need to be receptive to ideas and principles from other jurisdictions and cultures. The topic is not examinable as such, but it will help you to appreciate what has helped to mould the law into its current shape.

Don’t worry too much at this stage of your studies about the finer detail of the material in this chapter. You may want to review this material periodically as you complete your work on each different type of intellectual property right. For the moment, you should concentrate on understanding the key point that United Kingdom intellectual property law has not developed in isolation, but rather has evolved in response to a number of external forces, both legislative and judicial.


u identify the principal international and regional conventions which have affected United Kingdom legislation relating to intellectual property, and describe the key features of each

u explain the effect of EU secondary legislation and its impact on United Kingdom intellectual property law

u identify the various tribunals which contribute to United Kingdom case law on intellectual property and explain how their jurisdiction arises

u list the principal sources of United Kingdom intellectual property law.

Intellectual property 3 Sources of intellectual property page 25

3.1 International conventions

Essential reading ¢ Bently and Sherman, ‘Introduction’ pp.5–11.

¢ Cornish, Chapter 1: ‘Starting Points’ paras 1-30 to 1-36.

¢ Norman, Chapter 1: ‘General Introduction’ paras 1.6.1 and 1.6.2

¢ May ‘Why IPRs are a Global Political Issue’ [2003] EIPR 1.

¢ Arup ‘TRIPs: Across the Global Field of Intellectual Property’ [2004] EIPR 7.

United Kingdom intellectual property law owes much to international conventions, since these have often been the catalyst for the creation and/or revision of domestic legislation. Most, but not all, conventions are issued and administered by the World Intellectual Property Organisation (WIPO), a UN agency based in Geneva. WIPO’s chief objectives are to encourage and assist developing and less developed countries to establish effective protection for intellectual property rights, and to work towards an international consensus on the standardisation of national laws.

Besides this educational role, WIPO administers a number of conventions dealing with intellectual property. WIPO itself divides these conventions into three main types, namely protection treaties, global protection systems and classification treaties.

3.1.1 WIPO protection treatiesProtection treaties specify the types of right which are to be recognised, the criteria for their protection and the minimum standards to be applied to each type of right. Contracting States are obliged to adhere to these criteria and standards in their domestic legislation. The prime example of a protection treaty is the Paris Convention for the Protection of Industrial Property 1883 (as revised at Stockholm 1967) (you will find the principal provisions of this in your statute book). The Paris Convention deals with those intellectual property rights which can be obtained by means of registration (that is, patents, trade marks and designs). It also requires Contracting States to provide protection against unfair competition. Membership of this Convention obliges a Contracting State to establish its own patent office and, once established, for that office to issue certain publications (for example, a patents journal or a trade marks journal). There are, however, two particular substantive rights created by the Convention, namely priority claiming and national treatment, which you will come across in your studies.

Priority claiming (Article 4) enables an applicant for a patent, trade mark or design, once they have filed an application in one of the Contracting States, to backdate all subsequent national filings made within a specified period to the date of that first national filing, provided the later filings relate to the same subject matter. The specified periods are 12 months for patents, and six months for trade marks and designs. The ability to backdate a patent application by up to 12 months is of great practical importance in ‘the race to the patent office door’. We shall return to the issue of ‘claiming convention priority’ later on in Chapter 15, when we look at the procedure for obtaining a United Kingdom patent, and in Chapter 16 when we consider patentability in more detail.

National treatment (Article 2) is the cornerstone of the Paris Convention and of many other international intellectual property conventions. It means that any state which becomes a signatory to the Convention is required to provide the same protection under domestic law to foreign nationals as it does to its own nationals. So, for example, the fact that the United Kingdom is a Contracting State to the Paris Convention means that it must offer nationals from other Contracting States (for example, Australia or Japan) the same treatment under United Kingdom law as it gives to United Kingdom nationals. However, because intellectual property laws differ from state to state, national treatment does not mean that (in our example), United Kingdom law must offer Australian nationals the same protection as they receive

In Chapter 2 it was explained briefly that the validity of a patent is determined by the state of the prior art at the filing date.


under Australian law. Australian law might provide better (or worse) protection than United Kingdom law, but that can have no bearing on the duty of the United Kingdom under Article 2 of the Convention not to discriminate against those from other Contracting States.

Besides the Paris Convention, dealing with registrable rights, WIPO also administers a number of conventions which deal with rights that are not registrable, namely copyright and related rights (these latter related rights are sometimes referred to as ‘neighbouring rights’). The chief of these conventions is the Berne Convention for the Protection of Literary and Artistic Works 1886 (as revised at Paris in 1971). The Berne Convention deals with literary, dramatic, musical and artistic works and films. It sets out the criteria for the existence of each one of these rights and the extent of protection conferred on the owner. We shall look at the impact of the Berne Convention on United Kingdom copyright law in more detail in Chapters 7 and 8, but two key features deserve brief mention at this point. First, the Berne Convention, just like the Paris Convention, contains the principle of national treatment in Article 5 and, second, in the same Article, also declares that copyright protection is not dependent on registration. The consequence is that copyright protection arises automatically once a work comes into existence.

The remaining categories of copyright and related rights are dealt with by another WIPO Convention, the Rome Convention for the Protection of Performers, Record Makers and Broadcasting Organisations 1961 (the so-called ‘Neighbouring Rights Convention’). This sets out the obligations of Contracting States with regard to the protection of sound recordings (called phonograms in the Convention), broadcasts and performances. Like the Berne Convention, it specifies the criteria for existence of each of these rights and the scope of protection accorded to the owner. Similarly, it also contains the principle of national treatment and declares that protection is not dependent on registration. It does, however, provide for the formality of a copyright notice to be affixed to each copy of the work in the case of sound recordings (the

symbol).

Lastly, in relation to copyright and neighbouring rights, you should note that WIPO, in 1996, concluded two further treaties, the WIPO Copyright Treaty and the WIPO Performers and Phonograms Treaty. The objective of these two conventions is to spell out more clearly the rights of the copyright owner in the digital era, especially with regard to the exploitation of copyright works on the internet. They build, respectively, on the Berne Convention and the Neighbouring Rights Convention.

An alternative route, which was designed to assist citizens of developing countries obtain copyright protection in developed countries, is the Universal Copyright Convention (the UCC). This was initially agreed in Geneva in 1952 and revised in Paris in 1971. It is unusual in that it is administered not by WIPO but by the United Nations Educational, Scientific and Cultural Organisation (UNESCO). The scope of the UCC is the same as the Berne Convention, in that it deals with literary, dramatic, musical and artistic works and films. Just like the Berne Convention, it contains the principle of national treatment, but in contrast it does require the use of a copyright notice on a work as a pre-condition to protection (the © symbol). The intention of its creators was that when former colonies obtained their independence, membership of the UCC would ensure national treatment for their citizens in the countries which had previously governed those territories.

Each of these conventions can be found in your statute books. Their effect on United Kingdom copyright law (and in particular the way in which the requirement of national treatment is implemented) will be examined in more detail in Chapter 7.

Activity 3.1Read Articles 1, 2, 3, 4A, 5quinquies, 6, 6bis, and 10bis of the Paris Convention, Articles 1, 2 and 3 of the Berne Convention, and Articles 1, 2, 3, 7, 10 and 13 of the Neighbouring Rights Convention set out in your statute book. List the categories of intellectual property rights which each one covers. List the principal obligations which each one imposes on its Contracting States.


Name of Convention Type of rights covered Obligation of Contracting State

No feedback provided. You may prefer to draw up this table on a larger sheet of paper.

3.1.2 WIPO global protection systemsReturning to WIPO, global protection systems exist because of the territorial nature of intellectual property rights (see Chapter 2) and the consequent need to assist businesses who want to obtain registration for their rights in more than one country. Essentially these systems provide procedural shortcuts to enable an applicant to make multiple filings in respect of patents or trade marks. The two principal global protection systems operated by WIPO are the Patent Co-operation Treaty 1970 (which provides for the multiple filing of patent applications) and the Madrid Agreement for the International Registration of Marks 1891 (revised Stockholm 1967) as amended by the Protocol to the Madrid Agreement 1989 (which provides a mechanism for filing multiple applications for trade marks). These are beyond the scope of the syllabus and you simply need to be aware that such mechanisms exist.

3.1.3 WIPO classification treatiesLastly, classification treaties exist primarily to standardise the internal workings of national patent offices, and trade marks and design registries. For example, there is a standard classification for goods and services for trade mark applications and a standard classification for the subject matter of patents. The only classification treaty you are likely to come across in your reading is the Nice Agreement for the International Classification of Goods and Services 1957. The Agreement is incorporated into United Kingdom law by means of Schedule 4 of the Trade Marks (Amendment) Rules 2001 (set out in your statute book) and its application is explained in Chapter 12 below.

Further information about WIPO and its activities is available from www.wipo.int/portal/index.html.en

3.1.4 The World Trade OrganizationA rival force to WIPO would appear to be the World Trade Organization (WTO), established in 1994 at the conclusion of the renegotiation of the General Agreement on Tariffs and Trade (GATT). One of the conventions concluded in 1994 under the auspices of the WTO is the Agreement on the Trade Related Aspects of Intellectual Property (TRIPS). The WTO agreement itself was concerned to enhance the principle of free trade between states, such that membership of the organisation guarantees businesses established in one Contracting State that they will have access to the markets of other Contracting States. The price for such access (and some would say that the price has been too great) is the obligation placed on each Contracting State to sign up to the TRIPS Agreement. The TRIPS Agreement adds to all the previously mentioned conventions, by containing provisions on all major categories of intellectual property rights. It expressly incorporates the fundamental principles of the Paris and Berne Conventions, and requires Contracting States to accede to the latest versions of these (and other) treaties. Like them, it adopts the principle of national treatment.

However, the most significant feature of the TRIPS Agreement is that where a state is in breach of its requirements, another dissatisfied state may initiate the WTO dispute settlement procedure. If a complaint is upheld, then (once all the lengthy procedures have been exhausted) the complainant state may impose trade sanctions on the defaulting state (including import quotas and duties). This enforcement mechanism means that the TRIPS Agreement is a much more powerful force for change than the WIPO family of intellectual property treaties.


The TRIPS Agreement is not without its critics. It has been argued that it imposes US and European values on developing countries. As a result, it is said, international corporations are able to exploit many of the natural plant and animal resources of such countries through patent protection and in return can charge high prices for medicines regardless of the host nation’s healthcare needs. Conversely, intellectual property laws tend to emphasise modern forms of creativity (inventions, digital technology and brand names) at the expense of traditional knowledge and art forms.

Further information about the WTO and its activities is available from www.wto.org

Activity 3.2Read the articles by May and Arup listed at the beginning of this section. What are the main differences between WIPO and WTO? Which is likely to be more effective as a means of changing domestic intellectual property law? Does the TRIPS Agreement take account of the social and cultural values of developing countries?

3.1.5 The Council of EuropeThe last group of intellectual property conventions are those promulgated by the Council of Europe. This, it should be remembered, is not an EU institution, but the organisation which oversees the European Convention on Human Rights. Since its foundation the Council of Europe has concerned itself with a wide range of scientific and cultural issues and has issued two conventions dealing with patents. These are the Strasbourg Convention on the Unification of Certain Points of Substantive Law on Patents for Invention 1963 and the European Patent Convention (EPC). The latter was originally agreed in 1973 but was revised in 2000, with the new version (usually referred to as EPC 2000) coming into effect in December 2007. Membership of these two conventions is open to any state which belongs to the Council of Europe. Consequently, the membership of the EPC is far broader than that of the EU. You may occasionally come across references to the Strasbourg Convention in your reading: the main thing you need to remember about it is that it forms the foundation for the EPC by setting out some of the fundamental principles of patent law. You will come across frequent references to the EPC in your study of the law of patents. Its principal provisions are set out in your statute book and you must familiarise yourself with them.

The EPC establishes the European Patent Office (EPO) in Munich. In contrast to the Patent Co-operation Treaty mentioned above (which simply enables an applicant to make multiple filings worldwide in respect of a patent application, such filings ultimately being processed by national patent offices), the EPC is a regional intellectual property system which creates a system of centralised grants. One application to the EPO will, if successful, result in the granting of national patents in all of the Contracting States of the EPC (at present there are 36 and more are likely to join soon) unless the applicant indicates otherwise. A European patent in effect bypasses a national patent office. A European patent has the same effect in a Contracting State as a national patent granted by that state’s own patent office. So, in the United Kingdom, there are in force national patents granted by the United Kingdom Intellectual Property Office (UKIPO) as well as European Patents (UK) granted by the EPO in Munich. Each type of patent has exactly the same effect and, once granted, confers exactly the same type of rights.

The EPO has its own internal judicial organs, called Boards of Appeal and Enlarged Boards of Appeal, whose decisions are of persuasive value for United Kingdom courts when dealing with those patent cases which raise points of interpretation concerning the Patents Act 1977 (see further below under United Kingdom legislation).

When considering the effect of all of the above international conventions, you should remember the basic principle of United Kingdom constitutional law, which is that no convention is part of domestic law unless and until it is enacted by Parliament. Once enacted, United Kingdom courts will refer to the implementing legislation rather than the convention itself in determining the rights of the individual, as international

It is important for you to remember that the EPC is not a legal instrument of the EU, and so is not subject to the jurisdiction of the European Court of Justice.


agreements are not capable of direct effect. Although this used to be the attitude of United Kingdom courts to the EPC (see Lenzing AG’s European Patent [1997] RPC 245), more recently United Kingdom courts hearing intellectual property disputes refer directly to the original source in the interests of clarity: see Aerotel Ltd v Telco Holdings Ltd/Macrossan’s Application [2007] RPC 117 where the Court of Appeal looked to the wording of the EPC rather than section 1(2) of the Patents Act 1977 (see further Chapter 16). This is, of course, in contrast to the effect of many of the Articles of the Treaty of Rome 1957 and of many provisions of EU secondary legislation which do have direct effect.

Further information about the EPO, the EPC and the decisions of its judicial bodies is available from www.epo.org

Activity 3.3Explain the key features of the EPC. How does it differ from other international conventions dealing with intellectual property rights?

3.2 United Kingdom legislation

Essential reading ¢ Bently and Sherman, ‘Introduction’ pp.21–23.

¢ Cornish, Chapter 1: ‘Starting Points’ para 1-25.

¢ Norman, Chapter 1: ‘General Introduction’ para 1.6.4.

There are four principal statutes governing intellectual property law in the United Kingdom, and all were enacted or have been modified to take account of international or regional conventions, or EU secondary legislation. Taking them in chronological order, they are:

u the Registered Designs Act 1949, as amended by the Design Regulations 2001

u the Patents Act 1977, as amended by the Patents Act 2004

u the Copyright, Designs and Patents Act 1988 (CDPA)

u the Trade Marks Act 1994.

The influences on these four items of legislation will be dealt with in turn.

u The Registered Designs Act 1949 was almost entirely re-written in 2001 so that the United Kingdom could comply with the EU Designs Directive (see below).

u The Patents Act 1977 was primarily enacted to fulfil the United Kingdom’s obligations under the EPC (explained above) while the 2004 amendment Act takes account of the revisions made to the same Convention in 2000.

u The CDPA was initially a domestic measure (although it did enable the United Kingdom to ratify the 1971 version of the Berne Convention, explained above). However, it has since been amended on a number of occasions in order to implement various EU directives dealing with copyright and related rights. These directives are explained below.

u Finally, the Trade Marks Act 1994 was passed so that the United Kingdom could implement the EU Trade Marks Directive and the EU Trade Mark Regulation. These are also explained below.

It must be appreciated that because of these outside influences, UKIPO and United Kingdom courts (hereafter, ‘United Kingdom tribunals’) may be constrained in their interpretation of domestic legislation. In the Patents Act 1977, section 130 declares that key provisions in the Act (specifically those dealing with patentability, infringement and revocation) are intended to have the same effect as the corresponding provisions in the EPC, the EU Patent (explained below) and the Patent Co-operation Treaty have in other states which are members of these conventions.


This imposes an obligation on United Kingdom tribunals to take note of the case law of the EPO with regard to the interpretation of the criteria for patentability: see Merrell Dow v Norton [1996] RPC 76 at 82 (HL) and Kirin Amgen Inc and others v Hoechst Marion Roussel Ltd and others [2005] 1 All ER 667 at para 101, in each case per Lord Hoffmann.

Where domestic law has been enacted or amended to give effect to EU harmonisation directives, then the position of United Kingdom tribunals is even more constrained. First, it is a principle of EU law that the tribunals of a Member State are obliged to interpret national legislation adopted in implementation of a directive in such a way that its objectives are achieved: Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891. Even where there has been non-implementation or mis-implementation of a directive, national law must, after the deadline for implementation has passed, be interpreted in such a way as to comply with the wording and purpose of the directive: Case C-106/89 Marleasing [1990] ECR I-4135 and Case C-91/92 Faccini Dori v Recreb [1994] ECR I-3325. These principles of EU law must therefore be remembered when considering those provisions in the Registered Designs Act, the Trade Marks Act and the CDPA, which are based on the wording of EU directives. Further, the only court which can give an authoritative ruling on the meaning of a provision in such a directive is the Court of Justice of the European Communities (ECJ).

Activity 3.4List the four principal United Kingdom acts dealing with intellectual property rights. Which international or European laws have dictated the contents of each act? To which non-UK judicial bodies must the United Kingdom courts defer in their interpretation of this legislation?

Name of act Enacted in response to Non-UK judicial body affecting the interpretation


SummaryFour principal items of domestic legislation govern the law of intellectual property in the United Kingdom. They are the Registered Designs Act, the Patents Act, the CDPA and the Trade Marks Act. Each one has been enacted and/or amended to comply with the United Kingdom’s obligations under international conventions or EU law. United Kingdom courts therefore have to take account of these obligations when interpreting domestic law.

3.3 European Union legislation

Essential reading ¢ Bently and Sherman, Chapter 1: ‘Introduction’ pp.11–21.

¢ Cornish, Chapter 1: ‘Starting Points’ paras 1-26 to 1-28.

¢ Norman, Chapter 1: ‘General Introduction’ para 1.6.3.

At a fairly early point in the development of the European Economic Community (as it was originally called, now called the European Union (EU)), it was realised that intellectual property rights were one of the main non-tariff barriers to trade and therefore an obstacle to the creation of what is now known as the internal market. The internal market means that the 27 Member States are regarded as forming a single


territory without internal boundaries. The existence of national intellectual property rights formed an obstacle to attaining the internal market primarily because of their territorial nature (this concept was explained in Chapter 2). Another factor leading to the fragmentation of the internal market was that differences existed between the national laws of the Member States with regard to the criteria for protection, duration and scope of the various intellectual property rights. The EU Commission adopted a two-pronged strategy designed to overcome these problems, namely the enactment of a series of harmonisation directives, addressed to Member States, requiring them to standardise their national laws; and the creation of pan-European rights by means of directly applicable regulations.

3.3.1 Harmonisation directivesHarmonisation directives in the field of intellectual property have had a significant impact on United Kingdom law (and indeed the law of other Member States) in relation to trade marks, designs and copyright, but so far have had only a limited effect in relation to patents.

In relation to trade marks, the First Trade Marks Directive (Council Directive 89/104/EEC of 21 December 1988 on the approximation of the laws of Member States relating to trade marks [1989] OJ L 40/1, now codified as Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 [2008] OJ L 299/25) is declared to be a partial harmonisation measure, dealing only with those aspects of trade mark law which directly affect the functioning of the internal market. It therefore deals with:

u what signs can be trade marks

u the absolute and relative grounds on which a trade mark application may be refused

u the scope of protection afforded by registration to the proprietor of the mark to prevent infringing conduct by others

u the defences to infringement

u provisions dealing with the licensing of marks and the loss of registration.

All of these key provisions are reflected in the wording of the Trade Marks Act 1994, though in some instances, it must be said, the enactment of the Directive in the United Kingdom has been less than perfect, as we shall discover in Chapters 12 and 13 below. Other aspects of trade mark law, such as procedure and ownership, are left to the domestic laws of Member States.

One possible way in which a registered trade mark can be used by a competitor of the registered proprietor is by means of comparative advertising (a comparative advertisement occurs, for example, when one company states that its painkiller, ‘Brand A’ is more effective than ‘Brand B’ produced by its competitor). The First Trade Marks Directive did not deal with the issue of whether comparative advertising was a form of trade mark infringement. The United Kingdom government was therefore free to adopt its own rule, and consequently decided to liberalise the law on comparative advertising in the United Kingdom by declaring that such conduct should not amount to infringement ‘unless it was contrary to honest practices in industrial and commercial matters’. This provision forms section 10(6) of the Trade Marks Act 1994, explained in more detail in Chapter 13. However, since the enactment of section 10(6), the EU adopted the Comparative Advertising Directive (Directive 97/55/EC of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising [1997] OJ L 290/18, now consolidated as Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 [2006] OJ L 376/21 (the CAD)). The CAD did not amend the First Trade Marks Directive and was implemented into United Kingdom law by means of administrative regulation (The Control of Misleading Advertisements (Amendment) Regulations 2000), with enforcement being by way of complaint to the Advertising Standards Authority. Subsequently, the ECJ in Case C-533/06 O2 Holdings Ltd v Hutchinson 3G Ltd [2008] ECR I-4231 read the two directives together (see further Chapter 13).


Just as in the case of trade marks, in relation to designs, the Designs Directive (Council Directive 98/71/EC of 13 October 1998 on the legal protection of designs [1998] OJ L 289/28) has had a major impact on the content of United Kingdom law. Again, the Directive is declared to be a partial harmonisation measure only, leaving it to Member States to decide on procedure and remedies. The Directive therefore deals with those aspects of the law of registered designs which most affected the functioning of the internal market, namely the conditions for acquiring protection (including the definition of a design and the key criteria of novelty and individual character), the exclusions from protection and the scope of the infringement action. The Directive further provides that Member States are free to provide other legal methods of protecting designs (such as copyright and unregistered design right).

It is in relation to copyright that the EU has adopted the most number of directives. Their chief impact has been in relation to specific aspects of copyright, such as duration or new categories of rights. Although many of the directives appear to standardise the criterion for protection, by stating that the ‘work’ must be original, whether a ‘work’ meets the requirement of originality is still subject to the individual traditions of the Member States.

The two directives which you are most likely to encounter are:

u the Rental Rights Directive (Council Directive 92/100/EEC of 19 November 1992 on the rental right and lending rights and on certain rights related to copyright in the field of intellectual property [1992] OJ L 346/61, now codified as Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 [2006] OJ L 376/28) which clarifies that the copyright owner has the right to control the rental of copies of the copyright work;

u the Copyright Term Directive (Council Directive 93/98/EC of 29 October 1993 on harmonising the term of copyright protection [1993] OJ L 290/9, now codified as Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 [2006] OJ L 372/12) which standardises the duration of protection for the various categories of copyright work throughout the EU.

So, for example, in respect of those works covered by the Berne Convention, the term is to be the duration of the author’s life plus 70 years, provided the author is a national of one of the EEA Contracting States or the work’s ‘country of origin’ is an EEA Contracting State (the EEA comprises the current 27 EU Member States plus Norway, Iceland and Liechtenstein, three out of the four remaining members of the European Free Trade Area).

The impact of computers

Another group of directives has, over the years, endeavoured to deal with the impact of new technology on copyright and related rights. The first of these was the Semiconductor Directive (Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products [1987] OJ L 24/36), which, in response to legislation in the USA, provides protection for the three-dimensional lay-out of computer chips (you do not need to know the detail of this Directive, just be aware that it exists). Then there was the Computer Programs Directive (Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs [1991] OJ L 122/42) which provides that computer programs are to be accorded copyright protection ‘as literary works’. Lastly, there was the Database Directive (Directive 96/9/EC of 11 March 1996 on the legal protection of databases [1996] OJ L 77/20) which creates a two-tier system of protection for collections of works, data and other materials. We shall return to these last two directives in a little more detail when we consider the subsistence of copyright in Chapter 7.

Satellites and digital technology

Two further directives attempt to ensure that the owner of a copyright work is protected against exploitation of the work in new media. First, the Copyright Broadcasting Directive (Council Directive 93/83/EEC of 27 September 1993 on the

Chapter 9 of this subject guide will deal with how the United Kingdom offers protection for designs by these two particular routes, with information about the registered designs system being treated as background information only.


coordination of certain rules concerning copyright and neighbouring rights applicable to satellite broadcasting and cable retransmission [1993] OJ L 246/15) establishes the principle that the rights of owners of existing copyright works are to be protected when subjected to satellite or cable broadcasts. Next, the Information Society Directive (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [2001] OJ L 167/10) implements the WIPO Copyright Treaty and the WIPO Performers and Phonograms Treaty (explained above) by declaring the rights of authors to control the reproduction, issuing and communication of their works in the digital era.

Lastly, two recent directives deal with specific problems. The Droit de Suite Directive (Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art of [2001] OJ L 272/32) implements a particular provision of the Berne Convention, namely the right of an artist to be remunerated when the original version of his work is sold. By contrast, the worldwide problem with counterfeiting (which of course is not confined to copyright, but applies equally to trade marks) is dealt with by the Remedies Directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004] OJ L 157/45). This requires Member States to harmonise the civil remedies available to the intellectual property owner. Again, you do not need to worry about the detail of these measures.

Patents

The reason why there has been limited activity in the area of patents is that the original intention of the EU was to create a Community Patent by way of the Community Patent Convention 1975 linked to (indeed, heavily dependent on) the EPC. It was intended that the EU would accede to the EPC, so that an applicant for a European Patent could request protection for the territory of the EU as if the EU were a Contracting State of the EPC. The resulting Community Patent would therefore be a European Patent granted for the whole territory of the EU. The role of the Community Patent Convention would be to set out the scope of protection to be accorded to the patentee, that is, it would deal with infringement, defences, licensing and revocation, matters which under the EPC are left to national law. The Community Patent Convention was never ratified, and in 2000 the EU Commission decided that the Community Patent would be implemented by means of a regulation under the implied powers provision in the Treaty of Rome. Again, that proposal was never implemented. The ratification of the Lisbon Treaty in December 2009 appears to have enabled the proposed EU Patent to be reactivated (as a result of the Lisbon Treaty the name ‘Community Patent’ has been changed to ‘EU Patent’). This is due to the addition of a new Article 118 in the Treaty on the Functioning of the European Union (TFEU) (formerly the Treaty of Rome) which enables the creation of European intellectual property rights in the context of the establishment and functioning of the internal market. The new proposal to achieve the EU Patent entails, first, the enactment of a regulation under Article 118 TFEU to create the EU Patent; second, the accession of the EU to the EPC; third, the creation of a European and EU Patents Court System which would have exclusive jurisdiction in respect of validity and infringement issues concerning European and EU patents; and last, a regulation under the second paragraph of Article 118 TFEU dealing with the matter of translation of patent documents.

To date, there has only been one EU directive in the field of patent law. This is the Biotechnological Patents Directive (Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions [1998] OJ L 213/13). It was passed in response to the practice of the USA Patent Office of granting patents in relation to genetically engineered plants and animals, and because the Member States’ national patent offices had adopted varying attitudes to such patents. It declares that, provided the normal criteria for patentability are met, inventions consisting of biological material shall in principle be patentable. There are a number of exceptions, concerned primarily with ethical objections to such inventions, and the Directive also spells out the rights of the owner of such an invention against infringers.


3.3.2 Pan-European rightsThe EU has seen fit to create a Community-wide system in three areas, whereby the intellectual property owner can, in a single registration procedure, obtain protection throughout all Member States. Such rights are unitary in nature, that is, the rights are valid for the whole of the EU. Equally, if they are invalid in one part of the EU (for example, because the right in question does not meet all the criteria for protection or because of an earlier conflicting right) then they are invalid for the whole (think of this as being an ‘all or nothing’ system). Your syllabus does not require you to have detailed knowledge of these pan-European rights, you should merely be aware that they exist. The three systems are:

u the Council Regulation on Plant Variety Rights (Council Regulation (EC) 2100/94 of 27 July 1994 on Community Plant Variety Rights [1994] OJ L 227/1) (as a result of the Lisbon Treaty this will be known as ‘the EU Plant Variety Right’) (plant variety rights are not on your syllabus)

u the Community Trademark Regulation (Council Regulation (EC) 40/94 of 20 December 1993 [1994] OJ L 11/1, now consolidated as Council Regulation (EC) No. 207/2009 of 26 February 2009 on the Community trade mark [2009] OJ L 78/1) (as a result of the Lisbon Treaty this will be known as ‘the EU Trade Mark’)

u the Council Regulation on the Community Design (Council Regulation EC 6/2002 of 12 December 2001 on Community Designs [2002] OJ L 3/1) (as a result of the Lisbon Treaty this will be known as ‘the EU Design’).

The one you are most likely to come across in your reading (because its provisions are a mirror image of the First Trade Marks Directive above) is the Community Trade Mark Regulation. One result of the creation of parallel means of obtaining protection for trade marks (that is, registration at either national or Community level) is that the case law on the Directive is entirely interchangeable with the case law under the Community Trade Mark Regulation. You will therefore come across cases decided by the ECJ providing interpretation of key provisions in the Directive (as a result of a preliminary reference by a national court under Article 267 TFEU (formerly Article 234 EC) and cases decided on appeal from the Community Trade Mark Office under the Regulation which will give identical explanations of the two measures.

Further information about EU intellectual property legislation can be obtained from the internal market website of the EU Commission: http://ec.europa.eu/internal_market/top_layer/index_52_en.htm

Self-assessment questionsGo over the material contained in section 3.3 and check your understanding by answering the following questions.

u What legislative strategy did the EU Commission adopt to ensure that intellectual property rights did not affect the workings of the internal market?

u What is the difference between a harmonisation directive and a regulation which creates a European-wide right?

u How have the various harmonisation directives affected the content of United Kingdom intellectual property law?

u Which intellectual property rights have been made the subject of pan-European rights?

SummaryEuropean Union legislation dealing with intellectual property has been enacted with the goal of achieving an internal market. The areas most affected have been trade marks, copyright and designs, but in relation to patents there has been minimal impact. EU legislation either requires Member States to harmonise their national laws, or else creates pan-European rights in relation to plant varieties, trade marks and designs.


3.4 Case law

When reading intellectual property cases (which of course provide the interpretation of the statutory materials you will be studying), it is important that you understand two key points: which tribunal dealt with the matter and in which context.

Dealing with the latter point first, intellectual property case law can arise initially in the context of an application to register a patent, trade mark or design. Here, the tribunal will be concerned only with whether the application complies with the relevant statutory criteria. Second, case law can arise in the context of an action to restrain the infringement of any intellectual property right. It is important to remember that in the United Kingdom, the tribunal hearing the infringement action can also deal with any counterclaim that the registered right is invalid, and so will be concerned both with the criteria to be met by the successful claimant when suing for infringement and the criteria for registrability.

Hence, in the United Kingdom, decisions concerned with applications in respect of registrable intellectual property rights will be handed down by UKIPO (note that when dealing with applications to register trade marks or designs, these decisions will be issued by the Trade Marks Registry or the Designs Registry respectively). Infringement actions are dealt with either by the Patents Court (a specialist court within the Chancery Division) or the Patents County Court (see further Chapter 4 below). It is important that you do not confuse the decisions of UKIPO with decisions of the Patents Court.

As will have become apparent from the material discussed above, intellectual property rights effective in the United Kingdom can be granted by bodies other than UKIPO. In respect of patents, you will therefore come across decisions of the judicial organs of the EPO, and in respect of trade marks and registered designs, you will also be required to read cases decided by the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), the body responsible for granting EU trade marks and EU registered designs.

Lastly, there is now an increasingly large body of case law being handed down in intellectual property cases by the ECJ. This case law has two origins.

u First, where a national court in any Member State of the EU is required to apply a provision originating in one of the EU harmonisation directives (see above), the definitive interpretation of that directive may only be given by the ECJ under the preliminary ruling mechanism set out in Article 267 TFEU. You will find that over the last decade a considerable body of case law has developed, particularly in relation to the Trade Marks Directive.

u Second, where OHIM has made a decision relating to the registrability or otherwise of a Community trade mark or design application, appeal from OHIM lies initially to the General Court of the European Union (previously called the Court of First Instance of the European Community (CFI)), with a further appeal (on a point of law only) to the ECJ. The ECJ thus acts in two capacities: as the final appellate body for the registration of pan-European rights and as the only judicial body which can interpret harmonisation directives.

Decisions of UKIPO concerning the registration of intellectual property rights can be obtained from: www.ipo.gov.uk/home.htm

The website of the ECJ is: http://curia.europa.eu/jcms/jcms/j_6/

You may find it helpful to visit these sites on a regular basis as a means of keeping up to date with recent developments.



u identify the principal international and regional conventions which have affected United Kingdom legislation relating to intellectual property, and describe the key features of each

u explain the effect of EU secondary legislation and its impact on United Kingdom intellectual property law

u identify the various tribunals which contribute to United Kingdom case law on intellectual property and explain how their jurisdiction arises

u list the principal sources of United Kingdom intellectual property law.

Sample examination questionThe topics covered in this chapter, though vital for an understanding of intellectual property, are not examinable as such.


Reflect and review








Need to study again

I can identify the principal international and regional conventions which have affected United Kingdom legislation relating to intellectual property, and describe the key features of each.

¢

¢

¢

I can explain the effect of EU secondary legislation and its impact on United Kingdom intellectual property law.

¢

¢

¢

I can identify the various tribunals which contribute to United Kingdom case law on intellectual property and explain how their jurisdiction arises.

¢

¢

¢

I can list the principal sources of United Kingdom intellectual property law.

¢ ¢ ¢


Must revise

Revision done

3.1 International conventions ¢ ¢

3.2 United Kingdom legislation ¢ ¢

3.3 European Union legislation ¢ ¢

3.4 Case law ¢ ¢


Notes

Contents

Introduction 40

4 1 Generalmatters 41

4 2 Pre-trialremedies 42

4 3 Post-trialremedies 45

4 4 Involvementofpublicbodies 48

4 5 Publicpolicyrestrictionsontherightsoftheintellectualpropertyowner 48

Reflectandreview 51

4 Remedies


Introduction

This is a wide-ranging chapter which touches on all categories of intellectual property rights. You will discover that most remedies apply to all forms of intellectual property. It may seem a little odd to deal with the issue of remedies so early on in this subject guide. However, understanding what relief an intellectual property owner may obtain when suing for infringement will give you overall view of the subject, an appreciation of the importance of litigation for its development (remember, it is case law oriented) as well as providing an insight into a recurring theme, already raised in Chapter 2. This theme is the need to balance the interests of the intellectual property owner with the needs of free competition.

This chapter will concentrate on two issues, namely the remedies which can be obtained between the start of the action and the date of the trial, and those remedies available to the successful claimant after trial. It is on these that you should concentrate.

Learning outcomesBy the end of this chapter and of the relevant reading, you should be able to:

u explain what interim remedies may be available to an intellectual property owner before an infringement action comes to trial

u explain what final remedies may be available to an intellectual property owner when the claim for infringement succeeds

u describe how the intellectual property owner can request the assistance of public bodies in pursuing those who make and sell counterfeit goods

u describe the limitations which are imposed on the intellectual property owner’s right to litigate

u define: injunction, search order, damages, account of profits, threats action.

Preliminary reading ¢ Chapter 2 of this subject guide.

Intellectual property 4 Remedies page 41

4.1 General matters

Essential reading ¢ Cornish, Chapter 2: ‘The Enforcement of Rights’ paras 2-01 to 2-11, 2-28 to 2-30.

¢ Bently and Sherman, Chapter 47: ‘Litigation’ pp.1071–76.

¢ Norman, Chapter 2: ‘Enforcement of Intellectual Property Rights’ sections 2.1 and 2.2

By statute, all actions for the infringement of intellectual property rights are allocated to the Patents Court, which is part of the Chancery Division (Senior Courts Act 1981 section 6(1)(a), sections 61 and 62 plus Schedule 1). (Note that the Supreme Court Act 1981 was renamed the Senior Courts Act by the Constitutional Reform Act 2005.) Despite its name, the Patents Court deals with all types of intellectual property rights and has a number of specialist judges. In addition, for actions involving patents or designs (but not copyright, trade marks or passing off), there is the Patents County Court (Copyright, Designs and Patents Act 1988 (CDPA) section 287), which was intended to provide a less costly and more speedy means of litigation for small businesses. You will come across some of the decisions of the Patents County Court in your reading.

For those intellectual property rights which are statute based (that is, copyright, designs, patents and trade marks), the remedies are prescribed by the relevant statute. These statutes are largely declaratory of prior case law (Coflexip SA v Stolt Comex Seaway MS Ltd [2001] 1 All ER 952). There are minor differences between the various statutory regimes, which are not always logical. They simply reflect the piecemeal development of intellectual property case law and legislation. Remedies for passing off and breach of confidence are the result of case law alone and reflect the historical influence of the Court of Chancery over the development of these causes of action.

As a result of the Woolf Reforms, the Civil Procedure Rules (CPR) were introduced in 1999. So far as practicable, in giving effect to the overall objective of dealing with cases justly, courts must seek to save expense, act speedily as well as fairly, and in a manner which is proportionate. The reforms have also led to changes in terminology, so that ‘plaintiff’ becomes ‘claimant’, ‘writs’ become ‘claim forms’, ‘interlocutory injunctions’ become ‘interim injunctions’ (see below), Anton Piller orders become ‘search orders’ (see below) and Mareva orders become ‘freezing injunctions’ (again, see below). Latin words and phrases are to be avoided.

Activity 4.1Read the following statutory provisions and answer the questions below.

u Trade Marks Act 1994, sections 14, 15, 16, 19.

u CDPA sections 96, 97, 99, 100 and 114 (for copyright).

u CDPA section 103 (for moral rights).

u CDPA sections 229, 230, 231 and 233 (for design right).

u Patents Act 1977, sections 61 and 62.

u Registered Designs Act 1949, section 24.

1. What similarities can you detect between the various statutes?

2. What differences can you detect?



4.2 Pre-trial remedies

Essential reading ¢ Cornish, Chapter 2: ‘The Enforcement of Rights’ paras 2-31 to 2-36; 2-47 to 2-61.

¢ Bently and Sherman, Chapter 48: ‘Civil and Criminal Remedies’ pp.1100−109; Chapter 47: ‘Litigation’ pp.1076−079.

¢ Norman, Chapter 2: ‘Enforcement of Intellectual Property Rights’ section 2.3

¢ Cases: American Cyanamid v Ethicon [1975] AC 396 (read Lord Diplock’s speech only); Series 5 Software v Clarke [1996] FSR 273; Universal Thermosensors v Hibben [1992] 3 All ER 257.

¢ Philips, J. ‘Interlocutory Injunctions and Intellectual Property: A Review of American Cyanamid v Ethicon in the Light of Series 5 Software’ [1997] JBL 486.

¢ Russell, F. ‘Anton Pillers after Universal Thermosensors: Has the Pendulum Swung Too Far?’ [1992] EIPR 243.

If an intellectual property owner wishes to sue someone for infringement, a successful action may be of little value to the claimant if, in the meantime, the defendant is allowed to continue trading, thereby increasing their share of the market or doing other harm to the claimant’s business. Equally, issuing a claim form may have the effect of encouraging a defendant to destroy evidence of their infringing conduct, or to remove assets out of the United Kingdom so that no funds exist out of which to pay damages. Finally, an intellectual property owner may decide to sue a retailer who is selling infringing copies, but ideally would like to know who has been making these copies. All these difficulties can be overcome by the award of various interim orders.

4.2.1 Interim injunctionsInterim injunctions (formerly called interlocutory injunctions) are governed by the Senior Courts Act 1981 section 37 together with CPR Part 25. An interim injunction is a court order directing that certain acts do or do not take place or should continue, pending the final determination of the parties’ rights by the court. The objective is to preserve the status quo in order to prevent irremediable harm. Under the CPR, the court has discretion to grant an injunction where it appears just and convenient to do so, subject to such conditions as the court thinks just. Speed is of the essence in seeking interim relief. Claimants must offer a cross-undertaking in damages, that is, pay money into court as security in case they lose at the main hearing.

The principles which govern the grant of interim injunctions were stated by Lord Diplock in American Cyanamid v Ethicon [1975] AC 396. At the time, Lord Diplock was simply endeavouring to restate the fundamental principle that the award of an interim injunction is essentially discretionary. This was because, he said, the Court of Appeal in Cyanamid had treated the matter as if it were a ‘rule of law’ by demanding that the claimant establish a prima facie case. More recently the matter has been revisited by Laddie J in Series 5 Software v Clarke [1996] FSR 273. He declared that the most important factor to be taken into account by the court in the exercise of its discretion was the strength of each party’s case. The combined effect of Series 5 and the CPR means that where a claimant’s damages at trial would be based on a reasonable licence fee (which will be the normal remedy in cases of copyright infringement), an interim injunction is unlikely to be awarded. However, the Court of Appeal in Douglas v Hello! Ltd (No 2) [2005] 4 All ER 128 observed that where the harm to the claimant cannot easily be compensated (for example, where there has been an invasion of privacy, discussed in Chapter 5) then interim relief ought to be granted.

One of the issues mentioned in Lord Diplock’s judgment in American Cyanamid, the balance of convenience, needs further elaboration. It will require the court to consider the following factors.

u The relative size of the parties. They may be equal in size, for example, both being large multinationals and hence both able to pay damages if the other succeeded


at trial and both able to survive competition in the marketplace, as in Polaroid v Kodak [1977] FSR 25. On the other hand, the claimant may be small and the defendant a large enterprise with ‘muscle’, as in Corruplast v Harrison [1978] RPC 761 or the defendant may be relatively new to the market while the claimant is well established and well able to withstand competition, as in Catnic v Stressline [1976] FSR 157.

u There may be public interest grounds for refusing relief (for example, whether an interim injunction would prevent a new life-saving drug from reaching the market, as in Roussel-Uclaf v G.D. Searle [1977] FSR 125).

u Any delay by the claimant.

u Whether the parties are in direct competition.

u How close their products are in terms of characteristics and quality.

u Whether granting or not granting an injunction might put one of them out of business.

u The risk to either party’s investment (see for example Catnic v Stressline [1976] FSR 157), including the risk of redundancies among their employees.

Impact of the Human Rights Act 1998

In relation to an action for breach of confidence or copyright infringement, the Human Rights Act 1998 needs to be remembered. Section 12(3) states that no relief which might affect the exercise of the right to freedom of expression is to be granted so as to restrain publication before trial, unless the court is satisfied that the applicant is likely to establish that publication should not be allowed. The effect of this provision on the American Cyanamid conditions was considered by the House of Lords in Cream Holdings Ltd v Banerjee [2004] 3 WLR 918.

4.2.2 Search ordersThese are governed by the Civil Procedure Act 1997 section 7, together with CPR Part 25. Such an order, which is obtained without notice, is one addressed to the defendant, requiring him/her to admit the claimant and the claimant’s solicitor to the defendant’s premises, in order to copy and/or remove evidence which might otherwise be destroyed. The order originated in Lord Denning’s judgment in Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55, where he laid down the primary criteria.

u The claimant must have an extremely strong prima facie case.

u There must be a serious risk of damage to the claimant’s interests.

u There must be compelling evidence that the defendant will dispose of or destroy documents if given warning (for example, on receipt of the claim form).

u The risk to the defendant’s business must not be excessive.

The purpose of the order is to fulfil a legitimate purpose, such as protecting the claimant’s copyright or other intellectual property right (see Columbia Pictures v Robinson [1986] FSR 367) but the court is required to bear in mind Article 8 of the ECHR (Chappell v UK [1989] FSR 617). Subsequently, concern about the abuse of the order led Nicholls VC to state clear guidelines for its grant (in Universal Thermosensors v Hibben [1992] 3 All ER 257). These have now been incorporated in the CPR. Because the application for the order is heard in the defendant’s absence, the onus is on the claimant to put all material facts before the court. Failure to do so may lead to the order being discharged or the evidence obtained not being admissible (Naf Naf v Dickens [1993] FSR 424). As with interim injunctions, the claimant must give a cross-undertaking in damages. The order must not have the effect of putting the defendant out of business. Once all the evidence has been copied, it must be returned to the defendant.


4.2.3 Freezing ordersThese also are governed by the Senior Courts Act 1981 section 37 and CPR Part 25. A freezing order (again, obtained without notice – that is, without the defendant being notified or being present in court) is designed to prevent the defendant from moving assets out of the jurisdiction or otherwise dissipating them or concealing them so as to deprive the claimant of any monetary compensation in the event of success at trial. It may relate to assets within the jurisdiction or worldwide. The order originated in Mareva Compania Naviera SA v International Bulk Carriers SA [1980] 1 All ER 213. The case established the following requirements.

u The cause of action must be justiciable within England and Wales.

u There must be a good arguable case on the merits.

u The defendant must have assets within the jurisdiction.

u There must be a real risk of removal or disposal.

The safeguards for such a draconian order are that the defendant must be left with enough money to live on and to carry on his day-to-day business. Nevertheless, the order can affect third parties, such as banks.

4.2.4 DiscoveryThe last interim order to consider is that of discovery. In Norwich Pharmacal v Commissioners of Customs & Excise [1974] AC 133 the House of Lords confirmed that an order could be made against the Commissioners of Customs and Excise to reveal the names of a company importing pharmaceutical products which infringed the claimant’s patent. More recently, in Ashworth Security Hospital v MGN [2003] FSR 311, a similar order was granted against a newspaper journalist, requiring him to disclose the name of the person who had supplied the journalist with the medical records of a convicted criminal being held in a secure hospital. The information had been disclosed to the journalist in breach of confidence. The House of Lords stressed, however, that the order was issued because of a pressing social need, and that a court issuing such an order should bear in mind the Human Rights Act 1998, in particular section 10(2) (the freedom of the press).

As with other interim relief, the onus is on the claimant to establish that there has been infringement of an intellectual property right. The court will limit the use of the information obtained under the order, so that it can only be used to support further intellectual property litigation.

The order for discovery of names (as a prelude to further litigation) should not be confused with an order for discovery of documents. The latter is one of a range of directions which may be made by the court as part of the case management process under the CPR.

Self-assessment questions1. What principles govern the award of interim (formerly interlocutory) injunctions?

2. What are the factors to be considered when assessing the balance of convenience?

3. What are the criteria governing the award of a search order?

4. When will a freezing order be awarded and on what criteria?

Activities 4.2–4.44.2 Read Lord Diplock in American Cyanamid v Ethicon and Laddie J in Series 5

Software v Clarke. Can the two judgments be reconciled?

4.3 A former Master of the Rolls once described the Anton Piller order as ‘one of the law’s two nuclear weapons’ (the other, incidentally, was the Mareva order).Comment on the accuracy of this statement.

4.4 Write a short summary of section 4.2 (no more than 100 words).

No feedback provided to 4.4.


4.3 Post-trial remedies

Essential reading ¢ Cornish, Chapter 2: ‘The Enforcement of Rghts’ paras 2-37 to 2-46.

¢ Bently and Sherman, Chapter 48: ‘Civil and Criminal Remedies’ pp.1112−123.

¢ Norman, Chapter 2: ‘Enforcement of Intellectual Property Rights’ section 2.4

¢ Bently, L. ‘Account of Profits for Infringement of Copyright: Potton Ltd v Yorkclose Ltd and Others’ [1990] EIPR 106.

¢ Cases: General Tire v Firestone [1976] RPC 197; Gerber v Lectra [1997] RPC 443 at 452–461 only; Gillette UK Ltd v Edenwest Ltd [1994] RPC 279; Potton v Yorkclose [1990] FSR 11; Island Records v Tring [1995] FSR 560; Redrow Homes Ltd v Bett Brothers plc [1998] 2 WLR 198; Nottinghamshire Healthcare NHS Trust v News Group Newspapers [2002] RPC 962.

The successful claimant in an intellectual property infringement action has a range of remedies available.

4.3.1 Final injunctionsEach of the principal statutes provides for the award of a final injunction: see, for example, the Trade Marks Act 1994 section 14; CDPA section 96; Patents Act 1977 section 61. The form of the injunction is governed by the wording of the relevant statutory provision: Coflexip SA v Stolt Comex Seaway MS Ltd [2001] 1 All ER 952 per Aldous LJ at para 60.

Nevertheless, even a final injunction is discretionary in nature and will not be awarded where it is unlikely that the defendant will repeat any acts of infringement. It will be discharged if the intellectual property right in question is declared invalid in other, parallel proceedings against a different defendant: Coflexip SA v Stolt Offshore MS Ltd [2004] FSR 34. Normally, the injunction is limited in time to the balance of the term of protection for the intellectual property right in question. However, where the defendant has obtained an unfair competitive advantage from the infringing conduct, so that on the expiry of the claimant’s right the defendant could immediately recommence manufacture of a rival product, the duration of the injunction may be extended beyond the expiry date of the right. The defendant will be restrained from competing with the claimant for the length of time it would normally take the defendant, starting afresh and without the knowledge already gained by their infringing conduct, to analyse the claimant’s product and set up a manufacturing facility (see Dyson Appliances Ltd v Hoover Ltd (No 2) [2001] RPC 544 for an example of this so-called ‘springboard’ relief).

4.3.2 Monetary remediesA successful claimant in an intellectual property infringement action will normally want to be compensated for the trespass to their right. Two forms of monetary remedy are available, common law damages and the equitable action for an account of profits.

Damages for the infringement of intellectual property rights are tortious in nature. Their objective is to restore the claimant to the position he would have been in had the defendant not infringed. Where the claimant is in the business of manufacturing goods, so that they are in competition with the defendant, then the measure of damages will be lost profits. In all other cases the measure of damages will be a reasonable licence fee. The principles governing the award of damages for intellectual property rights are set out in the case of General Tire v Firestone [1976] RPC 197 in the speech of Lord Wilberforce.

If damages are meant to compensate the claimant for the trespass to the intangible property right, can a patentee recover damages in respect of non-patented items which are normally sold as part of a patented product or process? The original view


was expressed in Polaroid v Eastman Kodak [1977] RPC 379, where Buckley LJ held that such ‘parasitic’ damages were not available because the monetary compensation must reflect the scope of the monopoly granted to the patentee. Consequently, the patentee could only claim for patented items and not any ancillary equipment. However, a more liberal attitude was shown in Gerber v Lectra [1997] RPC 443 where Jacob J held that the loss of sales of ancillary items which were invariably sold with the patented equipment were recoverable as being a direct result of the infringing conduct.

In the case of copyright infringement and unregistered design right infringement (CDPA 1988 sections 97(2) and 229(3)) but not any other form of intellectual property right, the court may award additional damages to reflect the flagrancy of the infringement. A similar provision existed in the Copyright Act 1956 in relation to copyright infringement, and its purpose was explained in Williams v Settle [1960] 1 WLR 1072. Section 97(2) has now been considered in some detail in Nottinghamshire Healthcare NHS Trust v News Group Newspapers [2002] RPC 962 by Pumfrey J. The judgment is useful, as it considers the general principles applicable to damages for the infringement of all intellectual property rights. In relation to the award of additional damages, Pumfrey J points out that the exact nature of the remedy had been left undecided by the House of Lords in Redrow Homes Ltd v Bett Brothers plc [1998] 2 WLR 198. It had been suggested that the award under section 97(2) was sui generis, but, he argued, a consensus was emerging. This was to the effect that such damages were similar to aggravated damages because of the policy restrictions on the award of exemplary damages and because of the possibility of bringing criminal proceedings against the infringer under the CDPA section 107. An example of additional damages being awarded can be found in Phonographic Performance Ltd v Reader [2005] FSR 891, where a disc jockey had failed to obtain a licence for the public performance of sound recordings for at least two years despite previous undertakings. The defendant was well aware of the need for a licence, had previously obtained one only under the threat of legal proceedings, and had no excuse for his failure to seek the appropriate licence. It was a case of deliberate and flagrant infringement.

Innocent infringement

The various statutes regarding with the award of damages for intellectual property infringement contain provisions dealing with the effect of innocence on the claimant’s ability to obtain such relief. The defendant’s innocence (which is objectively defined) must be as to the existence of the right (objectively defined). Such a provision is found in relation to the award of damages for copyright, design right, registered design and patent infringement, respectively, by virtue of CDPA sections 97(1) and 233(1), Registered Designs Act 1949, as amended, section 24B and Patents Act 1977 section 62(1). There is no such provision in the Trade Marks Act 1994. As to why innocence does not affect the award of damages for trade mark infringement, see Gillette UK Ltd v Edenwest Ltd [1994] RPC 279. Here, Blackburne J pointed out that, as the basis of the trade mark infringement action, historically speaking, was the effect of the defendant’s misrepresentation on the claimant’s customer, there could be no defence of innocence: if the consumer was misled, it did not matter whether the misrepresentation was innocent.

Account of profits

Equity provides an alternative to damages in the order for an account of profits. The aim here is to transfer to the claimant the profits which the defendant has made from his infringing conduct, rather than to compensate the claimant for lost revenue from the intellectual property right. For a good example of why a claimant would go for an account rather than damages (despite the complexity of the remedy and the fact that it condones acts of past infringement) see Potton v Yorkclose [1990] FSR 11. An account of profits can also be the appropriate remedy where there has been either breach of a fiduciary duty or breach of a civil servant’s duty to the Crown, as illustrated by A.G. v Blake [2001] AC 268.

Like the award of damages, a plea of innocent infringement by a defendant may have


the effect of denying a claimant this remedy. As to the effect of innocence on the award of an account of profits, see Patents Act 1977 section 62(1) (as regards patent infringement), the Registered Designs Act 1949 section 24B (as regards registered design right infringement) and Gillette v Edenwest (above) (as regards trade mark infringement). Innocence (which again has to be determined objectively) does not, however, affect the award of an account for copyright and unregistered design right infringement (see the CDPA sections 97(1) and 233(1)).

A claimant cannot have both damages and an account, but must elect between them. However, they do not have to do so until after the conclusion of the trial: see Island Records v Tring [1995] FSR 560. Where a claimant elects for an account, they may not also claim additional damages under the CDPA section 97(2): Redrow Homes Ltd v Bett Brothers plc [1998] 2 WLR 198.

4.3.3 Other post-trial reliefVarious ancillary remedies are prescribed by legislation to assist the intellectual property owner in the fight against counterfeiting. These include an order for the erasure of an infringing sign under the Trade Marks Act 1994 section 15 and an order for the delivery and destruction of infringing copies of copyright works, designs and trade marks (see, respectively, sections 99 and 114 of the CDPA; sections 230 and 231 of the same; and sections 16 and 19 of the Trade Marks Act 1994). The wording of these various provisions means that a court order can be made against an innocent retailer who happens to have infringing copies in its possession, and not just the counterfeiter who has made the products in question: Lagenes Ltd v It’s At (UK) Ltd [1991] FSR 492. Lastly, a copyright owner has, as a result of the CDPA section 100, the ‘self-help’ remedy whereby infringing copies can be seized. Note the stringent conditions which are imposed on this remedy, which in effect is only available against street traders rather than those with a permanent place of business.

Activities 4.5–4.64.5 Read the judgment of Pumfrey J in Nottinghamshire Healthcare NHS Trust v News

Group Newspapers. What explanation does he give for the award of additional damages for copyright infringement?


4.6 Why would a claimant elect for an account of profits rather than damages?

SummaryThe successful claimant has a choice of remedies for intellectual property infringement. They may seek the award of a final injunction (at least where the defendant is likely to continue infringement) and monetary compensation in the form of damages or an account of profits (which are mutually exclusive). Damages may be calculated on the basis of lost profits where claimant and defendant are in competition with each other, otherwise the basis of calculation is a reasonable licence fee. Statutes provide for a number of supplementary remedies.

Reminder of learning outcomesBy this stage, you should be able to:

u explain what interim remedies may be available to an intellectual property owner before an infringement action comes to trial

u explain what final remedies may be available to an intellectual property owner when the claim for infringement succeeds.


4.4 Involvement of public bodies

Essential reading ¢ Cornish, Chapter 2: ‘The Enforcement of Rights’ paras 2-19 to 2-27.

¢ Bently and Sherman, Chapter 48: ‘Civil and Criminal Remedies’ pp.1124−129, 1109–112.

¢ Norman, Chapter 2: ‘Enforcement of Intellectual Property Rights’, section 2.5.

Because of the widespread problem of counterfeiting, United Kingdom law provides for the intellectual property owner to invoke the assistance of the state in protecting what is essentially a right of private property. Counterfeiting has been estimated to cause a loss of between 10–15 per cent to world trade. It has arisen as a result of modern technology, whereby items which have required a considerable amount of initial investment of labour and capital to manufacture are easily copied, thereby depriving the creator of the expected return. In particular, films and sound recordings, computer software, fashion garments, shoes and perfumes are frequently the subject of counterfeiting.

The assistance provided by the state is two-fold. First, to commit copyright and trade mark infringement by way of trade gives rise to criminal liability: see CDPA section 107 and the Trade Marks Act 1994 sections 92 and 93. There is no such liability in relation to patents, registered designs, the unregistered design right nor the theft of trade secrets. Prosecution, however, is not confined to those who are counterfeiters, but may be brought against the intellectual property owner’s competitors: Thames & Hudson v Design & Copyright Artists Society [1995] FSR 153. The inconsistencies which formerly existed between copyright law and trade mark law as regards criminal penalties have been removed by the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002. The penalties have been increased by the Digital Economy Act 2010.

Second, as a result of EU Regulation, (Council Regulation (EC) 3295/94 as amended by Council Regulation (EC) No 241/1999), a copyright or trade mark owner who believes that counterfeit goods are about to be imported into the United Kingdom can notify HM Revenue and Customs, who have power to prevent such importation at the point of entry: see CDPA sections 111 to 112 and the Trade Marks Act 1994 sections 89–91.

4.5 Public policy restrictions on the rights of the intellectual property owner

Essential reading ¢ Cornish, Chapter 2: ‘The Enforcement of Rights’ paras 2-93 to 2-96.

¢ Bently and Sherman, Chapter 47: ‘Litigation’ pp.1080−083.

¢ Norman, Chapter 2: ‘Enforcement of Intellectual Property Rights’ section 2.6.

¢ Schwartz, G. and M. Gardner ‘Groundless Threats of Proceedings for IP Infringement: an Introduction to and Critique of the Statutory Provisions’ [2006] Comms L 85.

¢ Davies, I. and T. Scourfield ‘Threats: Is the Current Regime Still Justified?’ [2007] EIPR 259

¢ Cases: Cavity Trays Ltd v RMC Panel Products [1996] RPC 361; Prince plc v Prince Sports Group Inc [1998] FSR 21; L’Oreal (UK) Ltd v Johnson & Johnson [2000] FSR 686; Quads 4 Kids v Campbell [2006] EWHC 2482 (Ch).

From the above, it can be seen that civil litigation is the normal means by which owners of intellectual property protect their rights. However, because of the monopolistic nature of intellectual property rights (refer again to Chapter 2), it would be very easy for a large, multinational corporation to stifle competition from smaller


undertakings by threatening to sue them. United Kingdom intellectual property litigation is estimated to be one of the most expensive in the world. A small firm, therefore, receiving a ‘letter before action’ may be deterred by the expense from contesting the action and so give in to a larger, more powerful competitor.

For this reason, some United Kingdom statutes contain provisions which restrict the right of the intellectual property owner to threaten another with litigation. There are no restrictions in relation to copyright infringement, nor in relation to passing off or breach of confidence. However, the proprietor of a patent, trade mark, unregistered design right and registered design has to be careful when contacting a suspected infringer in case they render themselves liable to a threats action (see Patents Act 1977 section 70 as amended; Trade Marks Act 1994 section 21; the CDPA section 253; and the Registered Designs Act 1949 section 26). A threat was defined by Pumfrey J in Quads 4 Kids v Campbell [2006] EWHC 2482 (Ch) as ‘a statement from which a reasonable man in the position of a person to whom the statement is made understands is a statement that might well be the subject of infringement proceedings at some point in the future’. In this case, the defendant claimed to be the owner of various EU designs and wrote to eBay informing them that goods advertised by the claimant infringed his right: this was construed by the court as an actionable threat.

The whole point of a threats action is that the person affected by the threat (who then sues for the making of the unjustified threat) becomes the claimant and the intellectual property owner becomes the defendant. The claimant in a threats action may take the opportunity to challenge the validity of the intellectual property right itself. If they are successful, then the intellectual property owner may end up with nothing!

The effect of the above-mentioned statutory provisions is that an intellectual property owner (and anyone acting on their behalf, such as their solicitor) cannot make unjustified threats to sue for infringement of their rights. If unjustified threats are made, then any ‘person aggrieved’ (who need not be the direct recipient of the threat, merely someone affected by it) can themselves bring proceedings in which they can obtain a declaration, an injunction and damages. The onus is placed on the intellectual property owner to show that the acts in respect of which proceedings were threatened, constituted infringement and that the right in question was valid. The only exception is that the intellectual property owner can threaten to sue for acts of manufacture or importation (see Patents Act 1977 section 70(4); Trade Marks Act 1994 section 21(3); CDPA section 253(3); Registered Designs Act 1949 section 26(2A)). The provisions are therefore aimed primarily at protecting those involved further along the supply chain, such as retailers. The intellectual property owner can still threaten to sue someone who is making or importing infringing products. It should be noted that all of the abovementioned provisions contain an exception, whereby it does not constitute an actionable threat merely to notify a third party that a particular intellectual property right exists. You should also note that following the amendments to section 70 of the Patents Act 1977 there are some differences between patents, on the one hand, and other categories of intellectual property, on the other, but you are not expected to know the detail of this.

The message is, therefore, that before warning potential defendants of litigation, the claimant needs to be sure that (a) there has been an act of infringement, and (b) the right which has been infringed is valid. You should note that the wording of the sections does not restrict the intellectual property owner’s rights with regard to whom they threaten to sue, but with regard to what they threaten to sue for. In other words, you can write to someone alleging that they have infringed your patent by manufacture or importation, but not that they have infringed by sale: Cavity Trays Ltd v RMC Panel Products [1996] RPC 361. Further, where an intellectual property owner with rights in another country writes to a United Kingdom business intimating that they will take action, then such correspondence is actionable if the threat is received in the United Kingdom: Prince plc v Prince Sports Group Inc [1998] FSR 21. Lastly, the court will consider the wording of the communication from the intellectual property owner (it may be written or oral) to see whether viewed through the eyes of a third party it constitutes a threat: see L’Oreal (UK) Ltd v Johnson & Johnson [2000] FSR 686. Aggressive language does not necessarily have to have been used.


One further restraint on the intellectual property owner’s ability to enforce their rights should be noted at this point, although you do not need to worry about the detail. In certain instances competition law may be relevant. The Competition Commission (formerly the Monopolies and Mergers Commission) may in some cases impose a compulsory licence (see Patents Act 1977 section 51; the CDPA sections 144 and 239). The provisions in the various statutes dealing with instances where competition law constrains the rights of the intellectual property owner are complex: you do not need to worry about the detail, just be aware that they exist.

Activity 4.7Why should the intellectual property owner’s freedom to litigate be curbed by the threats action?

SummaryBecause of the potential power that an intellectual property owner could wield, statute curtails their ability to communicate with a third party alleging that they have committed infringement. A person aggrieved by the threat of litigation (who does not have to be the recipient of the communication, merely someone affected by it) can bring an action for the making of unjustified threats. The protection is intended for those further down the supply chain (e.g. retailers) rather than primary infringers such as manufacturers or importers of pirated goods.


u describe how the intellectual property owner can request the assistance of public bodies in pursuing those who make and sell counterfeit goods

u describe the limitations which are imposed on the intellectual property owner’s right to litigate

u define the following: injunction, search order, damages, account of profits, threats action.

Sample examination questionThe topics covered in this chapter are not separately examinable as such: your syllabus states that they are to be treated in outline only. You should therefore treat this chapter as complementary to those dealing with copyright, design right, trade mark and patent infringement. When you complete your studies of these topics (see Chapters 8, 9, 13 and 18) you should return to this chapter to remind yourself of the remedies which the successful claimant may obtain.


Reflect and review








Need to study again

I can explain what interim remedies may be available to an intellectual property owner before an infringement action comes to trial.

¢

¢

¢

I can explain what final remedies may be available to an intellectual property owner when the claim for infringement succeeds.

¢

¢

¢

I can describe how the intellectual property owner can request the assistance of public bodies in pursuing those who make and sell counterfeit goods.

¢

¢

¢

I can describe the limitations which are imposed on the intellectual property owner’s right to litigate.

¢

¢

¢

I can define the following: injunction, search order, damages, account of profits, threats action.

¢ ¢ ¢


Must revise

Revision done

4.1 General matters ¢ ¢

4.2 Pre-trial remedies ¢ ¢

4.3 Post-trial remedies ¢ ¢

4.4 Involvement of public bodies ¢ ¢

4.5 Public policy restrictions on the rights of the intellectual property owner

¢ ¢


Notes

Contents

Introduction 54

5 1 Typesofinformation:personal,commercialandstate 55

5 2 Theroleofbreachofconfidenceinintellectualpropertylaw 58

5 3 Thehistoricaldevelopmentofbreachofconfidenceandthebasisforitsprotection 59

5 4 Conditionsforprotection 59

5 5 Defences 64

5 6 Remedies:particularproblems 65

Reflectandreview 69

5 Breach of confidence


Introduction

The purpose of this chapter is to explain how the action for breach of confidence fits within intellectual property law. It will set out the circumstances in which the action for breach of confidence will arise, and the defences and remedies which may be available. It will also highlight some of the details which have still to be resolved by the courts and indicate key areas of recent judicial activity.

Breach of confidence is judge-made law. Because of this, it has developed in a piecemeal fashion, so that it is difficult to construct a clear rationale for the action. Further, some points of detail remain to be decided, and you will often find that the case law is contradictory. Nevertheless, the basic principles are now well established, and it is upon these that you should concentrate.


u explain, within the context of intellectual property, the significance of the action for breach of confidence in protecting ideas and information

u explain, with relevant authority, the criteria for the action of breach of confidence, the defences which could be raised and the remedies available to the successful claimant

u discuss those areas of the law which are unclear or contradictory

u understand how the action for breach of confidence has been used in combination with the Human Rights Act 1998 to protect celebrities from media intrusion.

Intellectual property 5 Breach of confidence page 55

5.1 Types of information: personal, commercial and state

Essential reading ¢ Bainbridge, Chapter 10: ‘The Law of Breach of Confidence’ pp.333–34.

¢ Bently and Sherman, Part V: ‘Introduction’ pp.1003–008.

¢ Cornish, Chapter 8: ‘Confidential Information’ paras 8-01 to 8-04.

¢ Norman, Chapter 3: ‘Breach of Confidence’ section 3.2.

¢ Cases: Seager v Copydex (No 1) [1967] RPC 349; Fraser v Thames Television [1983] 2 All ER 101.

The action for breach of confidence provides the only legal mechanism in United Kingdom law to protect ideas and information as such. Other categories of intellectual property rights require ideas and information to be embodied in a tangible form, such as inventions (patents), works (copyright) or the appearance of products (designs). Although there can be no property rights in information (Boardman v Phipps [1967] 2 AC 46, HL), where information, which is not in the public domain, has been disclosed in circumstances which impose an obligation on the recipient, then its use or further disclosure may be restrained.

Information protected by the action for breach of confidence may be commercial, personal or governmental.

u Commercial information may relate to an idea for a new television series, a new product (which might or might not be capable of patent protection), steps to be taken in a manufacturing process or a list of valued customers.

u By contrast, personal information will involve facts about an individual which they regard as sensitive and, therefore, private.

u Government information concerns state secrets and other material about the internal workings of the state and its agencies, which the government would rather not be made public.

You will find that the leading cases to which you will be referred are drawn from each of these three areas. The principles which they establish are applicable across the whole area of breach of confidence. Nevertheless, you should focus your reading on the way in which breach of confidence operates in the commercial world to protect trade secrets.

Activity 5.1Read the following cases.

u Seager v Copydex (No 1) [1967] RPC 349

u Fraser v Thames Television [1983] 2 All ER 101.

What was the information that was protected? Why were the defendants liable?


5.1.1 The relationship between breach of confidence and human rights

Essential reading ¢ Bainbridge, Chapter 10: ‘The Law of Breach of Confidence’ pp. 335–37.

¢ Bently and Sherman, Part V: ‘Introduction’ pp.1003–008.

¢ Cornish, Chapter 9: ‘Personal Privacy’ paras 9-01 to 9-23.


¢ Cases: Naomi Campbell v Mirror Group Newspapers Ltd [2004] 2 AC 457 (HL) (especially the judgment of Lord Hope); Von Hannover v Germany (2004) 40 EHHR 1; Douglas & Zeta-Jones v Hello! Ltd [2001] 2 WLR 992 (CA) (especially the judgment of Sedley LJ) (this concerns the application for interim relief); Douglas & Zeta-Jones


v Hello! Ltd (No 2) [2005] 4 All ER 128 (CA) (this concerns the substantive issues); Douglas v Hello! Ltd [2007] 2 WLR 920 (HL) (do not try to read the whole case, only those parts relating to whether the defendant was liable to OK magazine as well as Mr Douglas).

One particular area of recent judicial activity has been in relation to privacy. In several decisions dealing with personal information, the courts have held that, when combined with the Human Rights Act 1998, the action for breach of confidence is the means to create a right of privacy, although in this context the proper name for the action is not ‘breach of confidence’ but ‘misuse of personal information’ (see Lord Nicholls in Naomi Campbell v Mirror Group Newspapers Ltd [2004] 2 AC 457). You should note, however, that these cases (many of them about high-profile celebrities) involve unique facts. Further, in each case, the court has been required to balance Article 8 of the European Convention on Human Rights (ECHR) (respect for private and family life) with Article 10 (freedom of expression). The significance of these cases from the intellectual property perspective is that they move us a step closer to the creation of a right of personality. We shall consider this in more detail in Chapter 14 when we look at character merchandising.

5.1.2 A possible right of privacyPrior to the implementation of the Human Rights Act 1998, United Kingdom courts had declared on more than one occasion that there was no right of privacy in United Kingdom law. Even though this state of affairs was regrettable, it was not for the courts to depart from well-established principle. The clearest statement of regret is to be found in Kaye v Robertson [1991] FSR 62 where the court was unable to give redress under the law of privacy to the claimant, a well-known actor. He had been the victim of a fictitious report published in the defendant’s newspaper while he was lying unconscious in hospital recovering from a serious car accident (the court did, however, find that the defendant had committed malicious falsehood and awarded damages to the claimant on that basis). Similar regrets were expressed by the court in Creation Records v News Group Newspapers [1997] EMLR 444, although here a remedy was granted because the claimants had established all the elements for a successful allegation of breach of confidence.

Since Kaye v Robertson, there has been a marked change of judicial attitude. The turning point was the interim (interlocutory) decision of the Court of Appeal in Douglas & Zeta-Jones v Hello! Ltd [2001] 2 WLR 992. While refusing to grant the claimants an injunction to restrain publication of their wedding photographs in the defendant’s magazine (because damages would be an adequate remedy), a majority of the judges were of the view that the extensive use by the claimants of confidentiality undertakings from guests and staff at the wedding was enough, when coupled with the Human Rights Act, to create a right of privacy. You should note in particular the comments of Sedley LJ as to the significance of the 1998 Act and its relationship with the action for breach of confidence. Similarly, in Venables & Thompson v News Group Newspapers Ltd [2001] 1 All ER 908, Butler-Sloss P granted a permanent injunction against all news media in the United Kingdom preventing them from disclosing the whereabouts and new identities of the claimants − two boys who had been convicted of murder − who, having served their prison sentences, wished to preserve their anonymity in case of revenge attacks. The key factor in this case, however, was the very real risk to the boys’ safety should their location become public knowledge.

Two other leading cases (both of which you must read) are Naomi Campbell v Mirror Group Newspapers Ltd [2004] 2 AC 457 and Von Hannover v Germany (2004) 40 EHHR 1. In the former, the House of Lords held that the claimant’s privacy had been invaded by detailed accounts appearing in the defendant’s newspaper of her attendance at a drug rehabilitation clinic in London. Although the newspaper was entitled to ‘set the record straight’ after the claimant had denied her drug addiction, it had gone too far in disclosing the details of her attendance at the clinic and pictures of her leaving a counselling session. You should note the views of the House of Lords that the publication of photographs is a particularly destructive form of invasion of privacy. In the latter, the European Court of Human Rights (ECtHR) drew a distinction between

Hello! is a popular pictorial magazine which publishes articles about the lives (and loves) of relatively famous people (TV performers, film stars, royalty and aristocrats).


facts contributing to a debate about politicians in the exercise of their duties and the reporting of details about the private life of an individual who does not exercise official functions. In the former case, the press had a vital role to play as the ‘watchdog’ of democracy, but this did not apply where photographs and articles had the sole purpose of satisfying the public’s curiosity. In this context, freedom of expression was to be interpreted more narrowly.

The test to be applied

Rather than the standard test for breach of confidence (explained at 5.4 below), it is now clear that there is a different test for ‘misuse of personal information’. It is whether the claimant had a reasonable expectation of privacy, assessed objectively (Naomi Campbell v MGN per Lord Nicholls at para 21 and Lord Hope at 99; Murray v Express Newspapers [2009] Ch 481 at para 35). If there is such an expectation, the court then has to balance Article 8 ECHR (respect for private and family life) with Article 10 (freedom of expression). Factors to be taken into account in deciding whether there is an expectation of privacy were helpfully set out by the Court of Appeal in Murray v Express Newspapers.

Where there is a pre-existing contractual relationship

In some of the cases, the confider and confidant of personal information have been in a contractual relationship, thus making it easier to show that there is a reasonable expectation of privacy. Apart from Douglas v Hello! Ltd where the claimants made extensive use of confidentiality undertakings from their wedding guests, you should note the Court of Appeal cases of McKennitt v Ash [2007] 3 WLR 194 (where the defendant was the claimant’s personal assistant) and HRH Prince of Wales v Associated Newspapers Ltd [2007] 3 WLR 222 (where the claimant’s private diary was stolen by a member of his staff). Nevertheless, it is not vital that there should be a contractual relationship, as evidenced by the decisions in Campbell v MGN and Mosley v News Group Newspapers [2008] EWHC 1777. The existence of contractual arrangements led the House of Lords in Douglas v Hello! Ltd to suggest that the case was not actually about misuse of personal information, but a straightforward commercial breach of confidence, thereby enabling their Lordships to conclude that the magazine with whom Mr and Mrs Douglas had made an exclusive deal to publish their wedding photographs had a claim against the defendant for publishing rival photographs.

Loss of privacy

It has sometimes been said that those who court publicity may find that their right of privacy is diminished (see A v B (a Company) [2002] 3 WLR 542, per Lord Woolf at para 11(xii) where the court refused to restrain the disclosure in the newspapers of the extra-marital affairs of a famous footballer). In Theakston v MGN [2002] EWHC 137, Ouseley J likewise refused to restrain the publication of a story concerning the visit to a brothel by a television personality. These two cases should be treated with caution in view of the later decision of the ECtHR in Von Hannover v Germany and in particular because they appear to confuse whether it is in the public interest to disclose information with whether something is of public interest (the public interest defence is considered at 5.5 below). Later cases like McKennitt v Ash, HRH Prince of Wales v Associated Newspapers and Mosley v News Group Newspapers have all applied the test in Von Hannover v Germany restricting the public interest defence to those cases where the claimant holds elected office. They have therefore upheld the right to privacy rather than freedom of expression. Nevertheless, the press are entitled to set the record straight where a public figure has made untrue pronouncements about his/her private life (Woodward v Hutchins [1977] 1 WLR 760 per Bridge LJ, Naomi Campbell v MGN, above, and Browne v Associated Newspapers [2007] 3 WLR 289). However the fact that an individual has achieved prominence on the public stage does not mean that his/her private life can be laid bare by the media: ‘it should [not] necessarily be in the public interest that an individual who has been adopted as a role model...should be demonstrated to have feet of clay’ (Naomi Campbell v Mirror Group Newspapers Ltd [2003] 1 All ER 224 at para 41 (CA)).


Useful further reading ¢ Phillipson, G. ‘Transforming Breach of Confidence? Towards a Common Law Right

of Privacy under the Human Rights Act’ (2003) 66 MLR 726.

¢ Morgan, J. ‘Privacy, Confidence and Horizontal Effect: “Hello” Trouble’ [2003] CLJ 443.

¢ Mulheron, R. ‘A Potential Framework for Privacy? A Reply to Hello!’ (2006) 69 MLR 679.

¢ Sims, A. ‘“A Shift in the Centre of Gravity”: The Dangers of Protecting Privacy Through Breach of Confidence’ [2005] IPQ 27.

¢ Moreham, N.A. ‘Privacy in the Common Law’ (2005) 121 LQR 628.


¢ Aplin, T. ‘The Development of the Action for Breach of Confidence in the post-HRA Era’ [2007] IPQ 19.

Activity 5.2Read the Naomi Campbell decision and the substantive CA decision (of 2005) in Douglas v Hello!. Assess the significance of these cases in creating an action for the misuse of personal information.

SummaryThe action for breach of confidence can, when combined with the Human Rights Act 1998, confer protection against media intrusion where the claimant has a reasonable expectation of privacy, unless it is in the public interest for the information to be disclosed. Such an action is to be referred to as ‘misuse of personal information’ rather than ‘breach of confidence’.

5.2 The role of breach of confidence in intellectual property law

Essential reading ¢ Bainbridge, Chapter 10: ‘The Law of Breach of Confidence’ pp.333−34.

¢ Bently and Sherman, Part V: ‘Introduction’ pp.1003−008.



In relation to commercial information, breach of confidence has several practical applications.

u It is an alternative to patent protection. An inventor may decide not to bother with obtaining patent protection for their invention, but instead to rely on secrecy (which after all is free!). As a reminder, in Seager v Copydex (No 1) (see above) the inventor had not obtained patent protection for a new type of carpet grip but was able nevertheless to argue that the defendants had misappropriated his ideas.

u It can protect ideas which are not yet sufficiently permanent to fall within the scope of copyright: see Fraser v Thames Television (above).

u It can offer parallel protection to copyright, so that there can be liability for publication even though there has not been copying: see Creation Records v News Group Newspapers [1997] EMLR 444 and Shelley Films v Rex Features [1994] EMLR 134.

u It can be used to protect the disclosure of potential patents or designs where it is necessary to have the item evaluated prior to filing the application – see section 2(4) of the Patents Act 1977 (explained in Chapter 16) and section 1(6) of the Registered Designs Act 1949 as amended (explained in Chapter 9).

However, relying on secrecy to protect an invention has limited use. It will not work where it is possible for a third party to ‘reverse engineer’ the invention (that is, having acquired a legitimate copy of the product, to analyse it to find out how it works before making their own version of the product).


u It is the way (by means of licensing) of protecting non-patentable but commercially valuable information (‘know-how’) relating to the procedures, etc. to be used in the manufacture of goods. (Note that there are also competition law implications in the licensing of technology but these are outside the scope of your syllabus).

5.3 The historical development of breach of confidence and the basis for its protection

Essential reading ¢ Bainbridge, Chapter 10: ‘The Law of Breach of Confidence’ p.334.

¢ Bently and Sherman, Part V: ‘Introduction’ pp.1003−004.



It is generally accepted that the first case to be decided was that of Prince Albert v Strange (1849) 1 H & Tw 1, where private drawings by Prince Albert had been sent to a printer to be copied professionally. The defendant had made unauthorised copies which he had intended to put on public display. An injunction was granted to restrain him. A more typical trade secret case was Morison v Moat (1851) 9 Hare 241, where the son of one of two business partners was restrained by the other partner, after the partnership had been dissolved, from making use of secret recipe for a medicine.

The basis for these early decisions was not made entirely clear, the arguments deployed including contract, property rights and conscience. Because many breach of confidence claims arise when the parties have previously been in a contractual relationship, there are numerous decisions where the courts strove to find some sort of implied contract to justify their decision. However, modern case law has moved away from implied contract and/or property rights towards the action being based on the equitable concept of ‘good faith’. The first clear statement that the action was based on the general notion of conscience was in Saltman Engineering v Campbell Engineering (1948) 65 RPC 203. Subsequent reiterations include those by Lord Denning in Fraser v Evans [1969] 1 QB 349 at 361 (‘It is based not so much on property or on contract as on a duty to be of good faith’) and Lord Keith in AG v Guardian Newspapers (No 2) [1990] 1 AC 109 (hereafter ‘Spycatcher’) (‘The obligation may be imposed by an express or implied term in a contract but it may also exist independently of any contract on the basis of an independent equitable principle of confidence.’)

SummaryThe action for breach of confidence is based on the equitable notion of good faith. The courts took some time to recognise this, because in many of the key cases the parties were in a contractual relationship. The existence of a contract is not a pre-requisite for the duty of confidentiality to arise.

5.4 Conditions for protection


¢ Bently and Sherman, Part V: ‘Introduction’ p.1008.

¢ Cornish, Chapter 8: ‘Confidential Information’ para 8-09.


¢ Cases: Coco v Clark [1969] RPC 41; AG v Guardian Newspapers (No 2) [1990] 1 AC 109 (‘Spycatcher’).


The leading case on breach of confidence (and therefore one which you must know) is Coco v Clark [1969] RPC 41. Here (at p.47) Megarry J set out the necessary ingredients for a successful claim. First, the information must be of a confidential nature; second, it must have been communicated in circumstances ‘importing an obligation of confidence’ and, third, subsequently there has been unauthorised use or disclosure of that information. These criteria have been repeated in numerous decisions since, and it is vital that you can recite them. We shall now explore these three ingredients in turn.

Activity 5.3 Write a concise summary of:

a. the basis of the action for breach of confidence

b. the conditions for protection.


5.4.1 Confidential information


¢ Bently and Sherman, Chapter 44: ‘Is the Information Capable of Being Protected?’ pp.1009−023.


¢ Norman, Chapter 3: ‘Breach of Confidence’ section 3.5.1

¢ Case: AG v Guardian Newspapers (No 2) [1990] 1 AC 109 (‘Spycatcher’), especially the judgment of Lord Goff.

The categories of information which may be protected by the action for breach of confidence are very wide. The form which the information takes is irrelevant: it may be in writing, in drawings, in photographs or oral. It need not be permanent. But according to Lord Goff in the ‘Spycatcher’ case, it must not be useless, trivial, vague or immoral. Information which is immoral must involve a breach of the criminal law and not merely conduct which some people find distasteful: Mosley v News Group Newspapers [2008] EWHC 1777. Further, the information must be capable of being identified and certain. This last point is illustrated by De Maudsley v Palumbo [1996] FSR 447 where it was held that vague preliminary ideas for the ‘Ministry of Sound’ nightclub were not protectable. This case should be contrasted with Fraser v Thames Television above. However, whatever the information may be, the one key requirement is that it must not already be in the public domain: it must be secret information (‘Spycatcher’ at p.282 per Lord Goff).

Lord Goff’s view of a breach of confidence:

Form is irrelevant: need not be permanent

Must not be ‘useless, trivial, vague or immoral’

Must be capable of being identified and certain

Must be secret (relatively)

The key issue for the court, therefore, is to decide what is public information.

A further point to note is that the action for breach of confidence is based on the concept of relative not absolute secrecy (unlike, as we shall see in Chapter 16, the case with patents) (Vestergaard Frandsen A/S v BestNet Europe Ltd [2010] FSR 29). Consequently, disclosure to a select few may not destroy confidentiality. Also, where the information is a mixture of public and private information, protection is still available if the defendant uses the information as a ‘springboard’ to gain a commercial advantage over competitors.


The ‘springboard’ doctrine originated in the judgment of Roxburgh J in Terrapin v Builders’ Supply Co [1960] RPC 128 where ‘mixed’ information was protected. Where the ‘springboard’ test applies, any remedy will be limited to the time it would take a competitor to reverse engineer the claimant’s information: Cadbury Schweppes Inc v FBI Foods Ltd [2000] FSR 491 (Supreme Court of Canada) (here the information was a secret recipe for a drink). The effects of the ‘springboard’ cannot be indefinite (Potters Ballotini v Weston Baker [1977] RPC 202) and will not apply if the information is already in the public domain (Vestergaard Frandsen A/S v BestNet Europe Ltd).

5.4.2 An obligation of confidence


¢ Bently and Sherman, Chapter 45: ‘Obligation of Confidence’ pp.1024−038.


¢ Norman, Chapter 3: ‘Breach of Confidence’ section 3.5.2

¢ Cases: Faccenda v Fowler [1986] 1 All ER 617; AG v Guardian Newspapers (No 2) [1990] 1 AC 109 (‘Spycatcher’), especially the judgment of Lord Goff.

The duty of secrecy can arise in a number of ways. Commonly, it may arise from a contract between the parties (there may be an express or implied term imposing the duty of secrecy). However, as stated above, it is not necessary to show that there was a contractual relationship, although evidentially this may help the claimant’s case considerably. Instead, the court can infer that there is a duty of confidence either from the parties’ relationship (such as a relationship of employment, that of professional adviser/client or a commercial joint venture) or simply from the circumstances of the disclosure, objectively assessed. The relationship, however, must be of the type which imposes an equitable duty of good faith.

You should be aware that at one time, there were suggestions in Thomas Marshall (Exports) Ltd v Guinle [1978] 3 All ER 193 and in Schering Chemicals v Falkman [1982] 1 QB 1 that the test was subjective, that is, whether the confider believed that the circumstances imposed secrecy. However, the weight of authority is now overwhelmingly in favour of an objective test. The courts have preferred the approach of Megarry J in Coco v Clark.

It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence.

This objective test was by implication approved in the ‘Spycatcher’ case by Lords Goff and Keith, and was expressly approved the House of Lords in Naomi Campbell v MGN (see above).

An example of an application of the objective test for the existence of the duty of secrecy is Stephens v Avery [1988] Ch 449. Here one friend disclosed to another that they were in a lesbian relationship. It was held that the friend should have realised from the circumstances of the disclosure that the information was confidential and not to be disclosed, least of all to a tabloid newspaper.

When dealing with the obligation of confidence, there are three distinct groups of recipients where greater discussion is required.

Employees

An employee owes the employer a duty of fidelity, that is, to further the interests of the employer’s business. This duty varies depending on the seniority and skill of the employee, and not all employees will necessarily receive the same treatment (you should make a note to compare this with the position of employee inventors and entitlement to patents when the matter is considered in Chapter 17). Very senior


employees will be treated as fiduciaries. The duty of good faith can encompass the duty not to compete with or injure the employer’s business (Hivac Ltd v Park Royal Scientific Instruments Ltd [1964] 1 All ER 350) as well as the obligation to maintain secrecy (Printers and Finishers Ltd v Holloway [1965] 1 WLR 1).

Ex-employees

Whether a former employee owes an obligation of secrecy to the employer depends again on the status, knowledge and skills of the employee. Further, there are three principal categories of information which must be kept quite distinct, namely trade secrets, commercially sensitive information and the employee’s general skill and knowledge (Faccenda v Fowler [1986] 1 All ER 617). The first category is automatically protected during and after the contract of employment. The second is automatically protected during the contract of employment because of the employee’s general duty of fidelity, but will require an express clause to protect it after termination of employment (which raises questions about clauses in restraint of trade – these are dealt with in more detail in most contract law textbooks). The last category of information is not protectable, so that the employee is free to make use of his/her skills in subsequent employment. The first and second categories are not necessarily easy to separate in practice.

Involuntary third party recipients

The starting point here is fairly obvious: unless protection is available against a third party recipient, protection would be worthless (per Lord Griffiths in ‘Spycatcher’). However, it is in this area that the cases are most contradictory. This stems in part from the difficulty of deciding the true rationale for breach of confidence. As stated above, in the absence of a contractual relationship, the justification for the action for breach of confidence is either that information should be treated as a form of property, or that liability rests on whether the defendant’s conscience was affected. Some of the cases tend to adopt a property law approach to the issue of involuntary third party recipients, so that the third party’s conduct is equated to theft of the information. Even where the court adopts the approach that it is the conscience of the recipient which is the key to liability, there is the further difficulty as to what level of knowledge is required. The classic example, given by Lord Goff in ‘Spycatcher’, is of a confidential document left lying on a desk in an office. This document may come into the hands of a third party in a variety of ways, for example by being stolen, acquired from the thief or blown through an open window onto the street below where it is accidentally found by a passer-by.

In some instances, where information has been obtained by unlawful means, the courts have focused on the conduct of the third party acquiring the information, the key issue being whether the third party acted illegally or not. Here there are two decisions which on their facts appear impossible to reconcile. In Malone v Commissioner of Police [1979] Ch 344 Megarry J held that there was no duty of secrecy in respect of information obtained when the police intercepted the claimant’s telephone calls. By contrast, in Francome v Mirror Group Newspapers [1984] 2 All ER 408, the court held that there was an obligation of confidence where information was obtained when the claimant’s telephone calls were overheard by a private investigator. Because of legislative changes relating to human rights, data protection and telecommunications law, these cases today would have different outcomes as regards the legality of the defendants’ conduct. One possible way of reconciling them as regards the law of breach of confidence might be to adopt the approach of Lord Woolf (in A v B (a Company) [2002] 3 WLR 542, at para 11(x)), that is, that the obtaining of information by unlawful means is an issue which goes to the exercise of the court’s discretion as to the award of an injunction.

In other instances, it is the knowledge (i.e. conscience) of the recipient which determines whether they are bound by confidentiality. Hence, as in the example given by Lord Goff, it is necessary to identify whether the subsequent recipient of information steals it, receives it with actual notice, receives it with constructive notice (‘turning a blind eye’) or receives it innocently. Ultimately it is a question of


conscience. An objective test is applied to determine whether the third party should in conscience be bound (Douglas & Zeta-Jones v Hello! Ltd [2003] 3 All ER 996 at para 198 (Lindsay J)).

Activity 5.4Read Faccenda v Fowler listed above. How does United Kingdom law classify information obtained by an employee during the course of his/her employment? How is such information treated once the employment contract has been terminated?

Activity 5.5Read the speech of Lord Goff in ‘Spycatcher’. What criteria determine whether an involuntary third-party recipient of confidential information is bound by secrecy?

5.4.3 Wrongful use or disclosure

Essential reading u Bainbridge, Chapter 10: ‘The Law of Breach of Confidence’ pp.367−68.

u Bently and Sherman, Chapter 46: ‘Breach, Defences, and Remedies’ pp.1039−046.

u Cornish, Chapter 8: ‘Confidential Information’ paras 8-37 to 8-39.

u Norman, Chapter 3: ‘Breach of Confidence’ section 3.5.3.

The final element which must be proved in order to succeed in the action for breach of confidence is that the defendant has gone beyond the purpose of the original disclosure. This may entail using the information for another purpose or, more usually, passing on the information to somebody else. Even here, there are some unresolved issues in the cases. For example, does there have to be some sort of detriment or harm suffered by the claimant (a useful comparison could be made here with the tort of defamation) or is the wrongful use per se enough? The matter was left open by the House of Lords in ‘Spycatcher’. In the case of commercial information, the loss of potential sales as a result of the defendant’s use of the information to make their own competing product will mean that detriment is not an issue. In the case of personal information, there are cases which hold that the mere fact that there has been disclosure suffices (see Argyll v Argyll [1967] Ch 302 and Michael Barrymore v News Group Newspapers [1997] FSR 600). By contrast, in Douglas & Zeta-Jones v Hello! Ltd [2003] 3 All ER 996 at para 199, it was suggested that there must be some more tangible detriment to the claimants. These difficulties can be resolved by arguing that the question of detriment is something which goes to the issue of the remedy to be awarded rather than the existence of liability, so that minimal harm will result in the award of nominal rather than substantial damages. This is illustrated by the Douglas & Zeta-Jones decision, where Lindsay J awarded only a small amount of compensation to the two celebrities but a substantial sum went to the magazine which had exclusive rights to their wedding photographs, a point subsequently confirmed by the House of Lords.

SummaryThe three ingredients for a successful claim of breach of confidence are confidential information, an obligation of confidence and wrongful use or disclosure by the confidant. Most of the uncertainties which surround these three elements can be resolved by reference to the speech of Lord Goff in the ‘Spycatcher’ decision.


5.5 Defences


¢ Bently and Sherman, Chapter 46: ‘Breach, Defences, and Remedies’ pp.1046−060.



¢ Cases: Lion Laboratories v Evans [1984] 2 All ER 417; Hyde Park Residence Ltd v Yelland [2000] 3 WLR 215; Ashdown v Telegraph Group [2001] 4 All ER 666.

5.5.1 Disclosure in the public interest Apart from pleading consent by the claimant or else arguing that the information is already in the public domain, the principal defence to an action for breach of confidence is that disclosure is ‘in the public interest’. You should be aware that some of the textbooks treat disclosure in the public interest as going to the issue of whether the information is protectable. The better view is that public interest is a defence to be raised in order to justify what would otherwise be the wrongful use of secret information which has been imparted in confidence. This is because disclosure in the public interest is also a defence to copyright infringement (see Chapter 8) and there have been several Court of Appeal decisions (notably Hyde Park v Yelland and Ashdown v Telegraph Group, listed above) involving both breach of confidence and copyright infringement, where disclosure in the public interest was pleaded as the defence common to both causes of action, and dealt with as such by the court.

Disclosure in the public interest (which is not the same as saying that something, for example gossip, is ‘of public interest’) means that the defendant is seeking to justify what has been done by reference to the interests of society as a whole. Disclosure is necessary in order for the rule of law to be upheld. ‘There is no confidence in the disclosure of an iniquity’ and ‘no man can be made the confidant of a crime or fraud’ are dicta often cited as the reason for the defence (see Gartside v Outram (1856) 26 LJ Ch 113 and Initial Services Ltd v Putterill [1968] 1 QB 396, CA). However, even though disclosure to public authorities may be justified (for example where there has been a breach of the law by the claimant) that may not entitle the defendant to tell the world at large (Francome v Mirror Group Newspapers [1984] 2 All ER 408).

The public interest defence, as originally set out in Initial Services Ltd v Putterill, was concerned with where there had been criminal conduct on the part of the claimant, or at least some other serious breach of the law (in Initial the employer’s breach of competition law justified the employee’s conduct in revealing what had gone on). Since that decision, the defence has been raised in many cases, not always successfully. In Lion Laboratories v Evans [1984] 2 All ER 417, publication of the fact that a device for testing motorists for drink-driving was unreliable was justified because otherwise there might be wrongful convictions. In Hellewell v Chief Constable of Derbyshire [1995] 1 WLR 804 the police’s use of prominently displayed posters identifying a criminal suspect was upheld. By contrast, in Hyde Park Residence Ltd v Yelland [2000] 3 WLR 215, publication in a newspaper of stolen video stills rebutting the claim that Princess Diana was about to marry Dodi Al Fayed was not ‘in the public interest’ (it might have been ‘of public interest’) as the information could have been supplied without copying the photographs (which were protected by copyright owned by the claimant). In Ashdown v Telegraph Group [2001] 4 All ER 666, publication of diaries showing the extent of the Labour/Liberal Democrat negotiations during the 1997 general election was not justified as being ‘in the public interest’: again the information could have been made available without infringing the claimant’s copyright. However, in A v B (a Company) [2002] 3 WLR 542 the court refused to restrain the publication of stories of a footballer’s marital infidelities on the basis that this was in the public interest. You should consider whether Lord Woolf’s reasoning in this case accords with that of the other cases mentioned above and with the principle set out in Von Hannover v Germany (considered at 5.1.1 above).


In the context of government information, the public interest defence operates in a slightly different way. In A-G v Jonathan Cape Ltd [1976] QB 752, the court refused to restrain the publication of the internal workings of the British cabinet in a politician’s diaries as there was no public interest justification for keeping it secret. Today, when a Crown servant pleads the public interest defence, the Crown must meet the additional burden imposed by the ‘Spycatcher’ case, namely that the Crown must show not only that the information was confidential but also that it was in the public interest that it should not be published.

Activity 5.6Consider whether the courts in recent decisions on breach of confidence have maintained the clear distinction between ‘in the public interest’, and ‘of public interest’.

5.6 Remedies: particular problems


¢ Bently and Sherman, Chapter 46: ‘Breach, Defences, and Remedies’ pp.1061−066.



¢ Chapter 4 of this subject guide on final injunctions and damages.

¢ Cases: Schering Chemicals v Falkman [1982] 1 QB 1; Seager v Copydex (No. 2) [1969] RPC 250; Vestergaard Frandsen A/S v BestNet Europe Ltd [2010] FSR 29.

5.6.1 InjunctionsIf a claimant is successful in an action for breach of confidence, they will normally want to restrain the defendant from making further use of the secret information. However, case law relating to the award of an injunction for breach of confidence is contradictory. It raises the question of the proper function of an injunction, and in particular whether such relief should be available once the information has become public knowledge. Where publication is the result of the confider making the information public, then no injunctive relief is available (Mustad & Sons Ltd v Allcock & Dosen (1928) [1964] 1 WLR 109, HL). The position is less clear where the information becomes public either through the conduct of the confidant or through the conduct of a third party. Despite the equitable maxim that ‘equity does nothing in vain’, there are decisions where an injunction has been granted. This raises the question whether the purpose of the injunction is to protect the claimant or to punish the defendant.

In Cranleigh Precision Engineering v Bryant [1966] RPC 81, post-publication injunctive relief was not granted, the court applying the maxim that equity does nothing in vain. By contrast, in Schering Chemicals v Falkman [1982] 1 QB 1 the Court of Appeal granted an injunction, despite the relevant information (about the side-effects of the claimant’s pharmaceutical) being known. Lord Denning’s powerful dissent in this case should be noted. Similarly, injunctive relief was granted in Speedseal v Paddington [1986] 1 All ER 91, and in the ‘Spycatcher’ case. In the latter case, you should note the lack of clarity by the House of Lords on this point as to whether Peter Wright, the former civil servant, could be enjoined from publishing his memoirs in the United Kingdom when they were readily available elsewhere. Their Lordships obviously felt some distaste in concluding that there was no point in issuing an injunction once the book had been published, as Peter Wright was profiting from his own wrong. The latest case, Vestergaard Frandsen A/S v BestNet Europe Ltd [2010] FSR 29 has reviewed earlier authorities and has concluded that Speedseal v Paddington was wrongly decided. Once information is available to the public, an injunction will not be granted.


5.6.2 CompensationThe case law on compensation for breach of confidence is likewise contradictory. Where the claimant seeks an award of damages, it is necessary to distinguish between those cases where the confidential obligation arises as a result of a contract and those cases where it does not. Where the breach of confidence is also a breach of contract, damages are calculated under the normal contract rules, although in exceptional cases, it is possible to award an account of profits. This last point is illustrated by A.G. v Blake [2001] AC 268, where a former security services employee who had defected had published his memoirs. His duties were held to be analogous to a fiduciary obligation, for which an account would have been the normal remedy.

Where the parties were not in a contractual relationship, the question is whether damages are awarded under the Senior Courts Act 1981 section 50 (i.e. in lieu of or in addition to equitable relief) or whether they are awarded independently on a quasi-tortious basis. If the latter is the case, a further question is how are they to be calculated? One answer is to be found in the case of Seager v Copydex (No. 2) [1969] RPC 250. Here the Court of Appeal decided that the measure of damages was to be as in the tort of conversion, so that the claimant was to be awarded the retail selling price of each infringing item produced by the defendants. This suggests that damages were awarded independently of the power in section 50. By contrast, in Dowson & Mason v Potter [1986] 2 All ER 418 the court awarded a reasonable licence fee, that is, the sum which the claimant would have charged for permission to use the information commercially, a calculation identical to that used in copyright infringement actions.

5.6.3 Proprietary reliefOne final question is whether a constructive trust could also be available if the defendant has ‘used’ the information to make a personal gain. Although this idea was accepted in the Canadian case of LAC Minerals v International Corona Ltd (1989) 61 DLR (4th) 14, the Supreme Court of Canada in Cadbury Schweppes Inc v FBI Foods Ltd [2000] FSR 491 has subsequently declared that a proprietary remedy is not appropriate. Instead, the court should calculate damages on the basis of lost profits during the notional period of one year it would have taken the defendant to ‘reverse engineer’ the claimant’s secret recipe for a drink. Similarly, the House of Lords in A.G. v Blake [2001] AC 268 ruled that a constructive trust should not be imposed on the defendant’s gains. There was no proprietary interest to protect. However, as noted above, their Lordships did suggest that an account of profits should be available instead where the defendant had been in a fiduciary or quasi-fiduciary position. This reasoning could therefore apply not just to Crown servants (as in Blake) but also to high-ranking employees, such as company directors.

Activity 5.7List the remedies that can be obtained for breach of confidence. Do the courts always act logically when granting an injunction to restrain the defendant? What pecuniary remedies are available and what is the basis for their calculation?


u explain, within the context of intellectual property, the significance of the action for breach of confidence in protecting ideas and information

u explain, with relevant authority, the criteria for the action of breach of confidence, the defences which could be raised and the remedies available to the successful claimant

u discuss those areas of the law which are unclear or contradictory

u explain how the action for breach of confidence has been used in combination with the Human Rights Act 1998 to protect celebrities from media intrusion.


Sample examination questionAlex is a leading politician and is well-known for her public commitment to ‘traditional family values’. She is a spokeswoman for a prominent anti-drink group. She is often in the media and is frequently seen on TV expressing her opinion on the topic of the day.

One Friday, Alex was at dinner at an exclusive London restaurant when she had rather too much to drink. She insulted and then assaulted one of the waiters and was ejected from the restaurant. On her way back from the restaurant that evening, Alex left her handbag in the taxi. It contained, among other things, her locked diary. The handbag was eventually returned, but the diary was missing.

Christian, a reporter from the Sunday Grime newspaper, had previously gained access to Alex’s London apartment and had placed a hidden tape recorder there, as he had heard rumours of her excessive drinking habits and wanted to show that her public image did not match her private lifestyle. He also hired a photographer to follow her around and take pictures of her.

Alex has found out that a story is due to be published in next week’s Sunday Grime. It will be entitled ‘Alex’s Fall From Grace’ and will include:

a. an interview with Brenda, one of the other diners at the restaurant on the night of Alex’s drunken outburst − the interview describes the events and what Alex said

b. extracts from Alex’s missing diary in which she describes intimate liaisons that she has had with other politicians

c. a transcript of one of Christian’s tapes in which Alex can be heard in conversation with a leading industrialist in which she agrees to accept money for asking certain questions in Parliament

d. photographs which show Alex coming out of the front door of a notorious London nightclub which has a reputation for encouraging drunken behaviour.

Advise Alex on whether she can prevent publication of any of the above information.

Advice on answering the questionWhen looking at this question, you should be aware that it involves breach of copyright as well as breach of confidence. You should therefore consider returning to the question once you have completed Chapters 6, 7 and 8.

A good answer would do the following.

u Begin by identifying the issues, namely breach of confidence and copyright.

u With regard to breach of confidence, set out clearly the traditional breach of confidence test in Coco v Clark and the different test for misuse of personal information established by the House of Lords in Campbell v MGN.

u Identify what information might be regarded as confidential so that A had a reasonable expectation of privacy. Here there was the conduct in the restaurant (which would have included what A said to the waiter), the words written in her diary, the spoken words recorded on the tape and the photographs. Are photographs, even if taken in a public place, the subject of special treatment? (See the comments of Baroness Hale in Campbell v MGN, those of the Court of Appeal in Douglas v Hello! and Murray v Express Newspapers.)

u Consider whether there was a reasonable expectation of privacy (which engages Article 8 ECHR) in which case it was necessary to balance the demands of Article 8 with those of Article 12 (freedom of expression). This needs to be done in respect of each of the items of information identified above. So, for example, in relation to the incident in the restaurant, was this a public or private place? Would A have expected that other diners (like B) would keep secret what they saw?


u Consider the public interest defence. What matters is not whether the information is ‘of interest’ to the public (as gossip) but whether the political position held by the person seeking to impose confidentiality warrants that their private conduct is open to scrutiny (see the comments of the ECtHR in Von Hannover v Germany) or whether the person seeking to publish the information is seeking to ‘set the record straight’ where there has been wrongdoing or hypocrisy (see HRH Prince of Wales v Associated Newspapers). Again, this needs to be considered in relation to each item of information. In particular, how would the defence apply in the case of a stolen diary (see Ashdown v Telegraph Group), the surreptitious tape recording and the photographs of A leaving the nightclub (compare this last point with the facts of Campbell v MGN). Was the fact that A was a prominent politician significant under Von Hannover? Did it matter that C was trying to reveal her hypocrisy? Had C gone too far in the methods used to do so?


Reflect and review








Need to study again

I can explain, within the context of intellectual property, the significance of the action for breach of confidence in protecting ideas and information.

¢

¢

¢

I can explain, with relevant authority, the criteria for the action of breach of confidence, the defences which could be raised and the remedies available to the successful claimant.

¢

¢

¢

I can discuss those areas of the law which are unclear or contradictory.

¢ ¢ ¢

I can understand how the action for breach of confidence has been used in combination with the Human Rights Act 1998 to protect celebrities from media intrusion.

¢

¢

¢


Must revise

Revision done

5.1 Types of information: personal, commercial and state ¢ ¢

5.2 The role of breach of confidence in intellectual property law

¢ ¢

5.3 The historical development of breach of confidence and the basis for its protection

¢ ¢

5.4 Conditions for protection ¢ ¢

5.5 Defences ¢ ¢

5.6 Remedies: particular problems ¢ ¢


Notes

Contents

Introduction 72

6 1 ThehistoryofcopyrightprotectionintheUnitedKingdom 73

6 2 Copyrightcomparedwithotherintellectualpropertyrights 74

6 3 Thejustificationforcopyrightprotection 76

6 4 Thenatureofcopyrightandtheidea/expressiondivide 76

Reflectandreview 79

6 Introduction to copyright


Introduction

The purpose of this chapter is to set the scene for the more detailed study of copyright law which follows in Chapters 7 and 8. It will explain the origins of the copyright system, as well as the background to the current legislation, and indicate how United Kingdom copyright law has been influenced by international conventions and EU directives.

As mentioned in Chapter 2, copyright is different from other categories of intellectual property right in that it does not depend on registration. We shall make further comparisons between copyright and other intellectual property rights. You may feel that it is a little early to undertake an activity of this kind, but from the work you have done in Chapter 2 you should have already acquired a ‘feel’ for the differences which exist between the various rights, and you can always revisit this chapter when you having finished working through the subject guide. The chapter will also examine the justifications which have been offered for the existence of copyright protection, another matter which should be familiar to you from your work on Chapter 2.

Last, but by no means least, we shall look at the nature of copyright protection. Copyright exists to protect works. The fundamental principle of copyright law is that what it protects is not ideas, but the form in which they are expressed. We shall look at some cases which explore this fundamental principle. It is this that you should concentrate on as it underpins much of the discussion in Chapters 7 and 8.


u understand how copyright law has often developed in response to technological change

u describe the external influences which have shaped United Kingdom copyright law

u compare the key features of copyright law with those of other intellectual property rights

u evaluate the principal justifications for the existence of copyright protection

u discuss the difference between an idea and its expression.

Preliminary reading ¢ Chapters 2 and 3 of this subject guide.

Intellectual property 6 Introduction to copyright page 73

6.1 The history of copyright protection in the United Kingdom

Essential reading ¢ Bainbridge, Chapter 2: ‘Background and Basic Principles’ pp.33−36.

¢ Bently and Sherman, Chapter 2: ‘Introduction to Copyright’ pp.31−34, 40−57.

¢ Cornish, Chapter 10: ‘Range and Aims of Copyright’ paras 10-01 to 10-41.

¢ Norman, Chapter 7: ‘An Introduction to Copyright’ section 7.2.

Most of the recommended textbooks contain an account of the development of copyright law in the United Kingdom. You should ensure that you read at least one of these accounts: the one by Cornish is the most detailed.

The impact of the printing pressIn summary, the foundations of copyright law can be traced back to the advent of the printing press in the fifteenth century. Under the Tudor monarchs, printing was perceived as a means of disseminating seditious material. Consequently, every book had to be licensed by the Stationers’ Company. The right of the Company (a craft guild) to control printing survived the restoration of the monarchy in 1660, but increasing losses suffered by publishers through the piracy of books created pressures for reform. As a result, the first Copyright Act 1709 (the Statute of Anne) was passed, conferring on publishers the ‘sole right and liberty of printing books’ for a maximum period of 14 years. If the author was still alive at the end of this term, then the right was ‘returned’ to him for a further 14 years.

An early concern was the relationship between the author’s ‘common law copyright’ (which was perpetual) and statutory copyright. It was held in Donaldsons v Beckett (1774) 4 Burr 2408 that once a work was published, statutory copyright extinguished common law copyright. However, common law copyright continued to exist in unpublished works and was only abolished by the Copyright Act 1911. Under current legislation, both published and unpublished works receive the same treatment.

Another issue which confronted the courts soon after the enactment of the 1709 Act (and which still arises today) was the constant need to interpret legislation to encompass new forms of creativity. In Bach v Longman (1777) 2 Cowp 623 the word ‘books’ in the Statute of Anne was interpreted so as to include sheet music. A similar debate (now of historical interest only) occurred in the 1980s as to whether computer software should be accorded copyright protection by treating it as a ‘literary work’.

After the Statute of Anne, further legislation was passed on a piecemeal basis, extending either the categories of work protected, the period of protection or the type of restricted act. You need not worry too much about the detail of the nineteenth century reforms given in Cornish, just be aware of the fact that copyright law was essentially reactive to technological change and to the constant demands for longer and better protection for authors, artists and composers.

Twentieth-century developmentsTwentieth-century legislation was characterised by the United Kingdom’s obligation to adhere to a number of International Conventions, in particular the Berne Convention 1886. If you are unsure about the scope of the Berne Convention, please refer to your notes for Chapter 3. Adherence to the Berne Convention was a catalyst for the Copyright Act 1911 which was (as Cornish explains) the first British legislation to bring the various copyrights within a single text. The 1911 Act was reviewed by the Gregory Committee of 1951, whose report lead to the Copyright Act 1956. This legislation again had to take account of technological change, in particular the advent of films and television. The 1956 Act was amended on several occasions, in particular in relation to the law of designs and in relation to computer software.

The 1956 Act was the subject of detailed scrutiny by the Whitford Committee in 1977 (Cmnd 6732). There followed a series of government Green Papers, culminating in the White Paper of 1986 Intellectual Property and Innovation (Cmnd 9712). As its


name suggests, the White Paper was concerned about the impact of technology on copyright. There was the need to protect new forms of creativity, while at the same time offering the copyright owner more effective redress, as technology such as photocopying machines and video recorders made copying easy. The result was the Copyright Designs and Patents Act 1988 (CDPA). Although it introduced sweeping changes, you should note the wording of section 172 regarding the interpretation of the Act in relation to the preceding law. Read section 172 of the CDPA now.

Since its enactment, the CDPA has been amended extensively to take account of a number of EU directives. These were explained in Chapter 3. One recent revision (contained in the Copyright and Related Rights Regulations 2003) implemented Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of aspects of copyright and related rights in the information society (‘the Information Society Directive’, [2001] OJ L 167/10). This Directive in turn was agreed by the EU in order to give effect to the WIPO Copyright Treaty 1996 and the WIPO Performances and Phonograms Treaty 1996 (again, these were discussed in Chapter 3). Another recent addition has been the inclusion of moral rights for performers. Performers’ protection is not on your syllabus.

Activities 6.1–6.26.1 Read the account of the development of United Kingdom copyright law in

Cornish. Write a concise summary of the various phases of this development.


6.2 ‘The history of copyright reveals that the law has developed in response to changes in technology. Such a pragmatic approach may have worked well a century ago, but the pace of change today is such that there is a real risk that the law will never catch up.’

Discuss.

6.2 Copyright compared with other intellectual property rights

Essential reading ¢ Chapter 2 of this subject guide.

Copyright exists to prevent the copying of a work, the categories of which are to be found in section 1 of the CDPA. As already explained in Chapter 2, copyright differs from other forms of intellectual property in that there is no system of registration and protection arises as soon as a work is created. The fundamental criterion for copyright protection is that the work must be ‘original’. It should not be assumed that this involves any great degree of creativity. United Kingdom copyright law (in contrast to the law of many other countries) treats copyright as an economic right rather than as an aspect of the author’s personality. This is often summarised by the saying ‘what is worth copying is worth protecting’. As a result, a wide range of everyday items attracts United Kingdom copyright protection, although such items may not be treated as copyright works in other jurisdictions. We shall examine what does and does not count as a copyright work for the purposes of United Kingdom law in Chapter 7.

Further, and again in contrast to patents and registered designs, independent creation is always a defence to copyright infringement. Copyright is therefore not an absolute monopoly. It exists to prevent copying, and the onus is on the claimant to establish that the defendant copied the claimant’s work. By contrast, under United Kingdom law, copyright infringement can be committed in the home, unlike trade mark, patent and design infringement which must be committed in the course of trade. The scope of copyright infringement is potentially very wide as there can be liability for indirect copying, for subconscious copying and for authorising others to commit infringement. However, there is no liability for the use of a copyright article. A purchaser of a legitimate copy of a work can do whatever they like with it as long as a ‘restricted act’ (that is, an act of infringement, usually, but not confined to, copying) is not committed.

You should ensure that your statute book contains the most recent version of the CDPA.


There is, however, one area where the distinction between use and copying has become blurred, namely, computer software. The use of software entails, of necessity, making a copy of it, even a temporary one while it is being run on a computer. The purchaser of a legitimate copy of software will have an implied licence to use it, whereas someone who acquires a pirated copy will be committing an act of infringement each time they use it.

One thing which copyright has in common with the law of trade marks is that commercial infringement gives rise to criminal liability. The provisions of section 107 of the CDPA are not limited to acts of deliberate counterfeiting, but apply to anyone who makes copies of another’s work by way of trade: Thames & Hudson v Design & Artists Copyright Society [1995] FSR 153. Because of the significance to the world economy of the activities of counterfeiters, United Kingdom law confers extensive powers on public bodies to deal with counterfeit goods. Thus, local authority trading standards departments and HM Revenue and Customs both play a major part in enforcing anti-counterfeiting laws.

Unlike patents, trade marks and designs, which are unitary in nature, copyright gives rise to a ‘bundle’ of rights, each one of which can be dealt with separately. Consider the following example.

J.K. Rowling, as author of the ‘Harry Potter’ books, has the right to control the reproduction of the books ‘in any material form’ (section 17 of the CDPA) as well as the right to control the first issuing of each copy of each book (section 18), the public performance of the books (section 19), their communication to the public whether by broadcast or the internet (section 20) and their adaptation, the latter word including turning the books into plays, their translation and converting them into a series of pictures (section 21). She therefore has (to name but a few) hardback rights, paperback rights, serialisation rights, talking book rights, dramatisation rights, film rights, radio and television broadcast rights and the right to control the translation of the books into any language. These rights exist automatically in any country which belongs either to the Berne Convention or to the WTO Agreement (over 150 countries worldwide). Each one of these rights can be assigned or licensed to third parties, either collectively or individually.

The fragmentary nature of copyright coupled with the lack of registration, automatic worldwide protection (because of the Berne and WTO Conventions) and lengthy duration can make it very difficult in practice to establish who owns which right in which country. However, for the purposes of the examination, you can assume that you are dealing only with the rights which an author has under United Kingdom law.

As regards the duration of copyright, the basic rule throughout the European Union is that copyright lasts for the lifetime of the author plus 70 years. This is considerably longer than the term of protection accorded to patents and designs, though as we shall see, trade marks are potentially capable of indefinite existence. When copyright protection expires, the work passes into the ‘public domain’, but many popular works (such as the image of Mickey Mouse, which is an artistic work under section 4 of the CDPA) manage to keep their copyright protection alive by means of constant revision, thereby triggering a fresh term of protection.

The current, relatively straightforward rules on duration apply only to works created after the effective date of the CDPA (1 August 1989). With regard to works created before this date, copyright will continue to subsist in an ‘existing’ work after the CDPA’s commencement only if it subsisted therein before commencement. This means that in practice it will be necessary to refer to the old law (that is, the 1956 Act, the 1911 Act or possibly even the 1842 Act) to see whether the work qualified for protection when it was made, whether the author of the work qualified for protection and what was the original term of protection for the work. This is because of the general principle that whether a work attracts United Kingdom copyright depends on the law in force when the work was made. You do not have to worry about the detailed rules for works created before the operative date of the CDPA. This would entail detailed research into the transitional provisions of the CDPA and its predecessors, and such provisions are not in your statute books. When answering examination questions, you may therefore assume that the relevant events occurred after 1 August 1989.


In addition to copyright, the CDPA deals with two other related rights, namely, moral rights and rights in performances. The latter do not form part of your syllabus and may be ignored. Moral rights will be considered in Chapter 8.

Activity 6.3Give a concise summary of the principal features of copyright as a category of intellectual property right.

6.3 The justification for copyright protection

Essential reading ¢ Bently and Sherman, Chapter 2: ‘Introduction to Copyright’ pp.34–39.

¢ Cornish, Chapter 10: ‘Range and Aims of Copyright‘ paras 10-42 to 10-55.

¢ Norman, Chapter 7: ‘An Introduction to Copyright’ section 7.3

¢ Chapter 2 of this subject guide.

¢ Laddie, H. ‘Copyright: Over-strength, Over-regulated, Over-rated’ [1996] EIPR 253.

¢ Vaver, D. ‘Rejuvenating Copyright’ (1996) 75 Can BR 69.

As discussed in Chapter 2, various justifications can be advanced for the existence of copyright protection. These include the natural law theory (of particular relevance in civil law countries, which view copyright as an extension of the creator’s personality), utilitarianism and the reward theory. If you are unsure of these arguments, then you should revisit your notes for Chapter 2. You should also remember that attitudes to copyright reflect the cultural values of a particular society.

Each of the justifications can be tested against the detail of copyright law, and in many instances may be open to question. For example, if copyright law is meant to reward creativity, why should it last 70 years after the death of the author? If copyright law is supposed to benefit society by providing an incentive to create, why does United Kingdom copyright law stress the economic value of copyright and accord protection to such mundane items as examination papers, football pools coupons and professional directories? Further, if the boundaries of copyright are being constantly expanded, where is the evidence that such expansion is justified?

Activity 6.4Read the article by Laddie listed in the essential reading. Then summarise the following points.

u The justifications which he puts forward for the existence of copyright law.

u His concerns about the expansion of copyright.

6.4 The nature of copyright and the idea/expression divide

Essential reading ¢ Bainbridge, Chapter 3: ‘Subsistence of Copyright’ pp.48–49.

¢ Bently and Sherman, Chapter 8: ‘Infringement’ pp.179–85.

¢ Cornish, Chapter 12: ‘Infringement of Copyright and Moral Rights’ para 1-06 and 12-07.

¢ Norman, Chapter 7 ‘An Introduction to Copyright’ section 7.5.

¢ Spence, M. and T. Endicott ‘Vagueness in the Scope of Copyright’ (2005) 121 LQR 657.


¢ Cases: Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416, in particular the judgment of Lord Hoffmann; Norowzian v Arks Ltd [1998] FSR 394 and [2000] FSR 363; Green v Broadcasting Corp of New Zealand [1989] 2 All ER 1056; Elanco v Mandops [1980] RPC 213; Baigent & Lee v Random House Group Ltd [2007] FSR 579.

It has long been a principle of copyright law that there is no protection of ideas per se unless they are embodied in permanent form: Donoghue v Allied Newspapers [1938] Ch 106 at 109. Copyright exists to protect works not ideas. The idea/expression dichotomy is found in international conventions (note the use of the word ‘expression’ in Article 2 of the Berne Convention and consider also Article 9.2 of the TRIPS Agreement).

An example of the difference between an idea and a work can be found in Green v Broadcasting Corp of New Zealand [1989] 2 All ER 1056, where the claimant tried to stop the defendant copying the format for a television programme, ‘Opportunity Knocks’. The Privy Council accepted the defendant’s argument that all they had taken was the idea. There was no ‘work’, such as a dramatic work, to be copied, and they had not copied any particular broadcast, as they had created their own television programmes. Another example is the decision in Norowzian v Arks Ltd (No 2) [1999] FSR 79, [2000] FSR 363 (CA). The claimant, a film director, had developed a film editing technique called ‘jump cutting’, the effect of which was to make the performer appear to make a series of jerky movements. The defendant employed the same technique when making a television advertisement for a well-known drink. The claimant tried to argue that they had copied his film: this argument failed, as the defendants had not made a copy. Instead, they had created a new film, using new actors, cameramen, etc. In the second instalment of the litigation, the claimant argued that the defendant had copied the original screen play (a dramatic work) embodied in the film. The Court of Appeal, though clearly sympathetic to the claimant, dismissed the action, primarily for the reason that there had been independent creation of a new work. Analysed closely, the decision is really concerned with the taking of an idea (how to edit film to produce apparently impossible movements by the actor) rather than the taking of a work falling within the statutory list in section 1 of the CDPA. You should remember the very precise facts of this case when we return to consider copying as an act of copyright infringement in Chapter 8.

Equally, it is possible to find examples in the cases of where the courts appear to be conferring protection on ideas themselves. The facts of Elanco v Mandops [1980] RPC 213 are a good example. Here, on the expiry of the claimant’s patent for a weedkiller, the defendant was able to commence manufacture of the product. The defendant copied the claimant’s safety leaflet which had to accompany the product. Having accepted that it had infringed copyright by so doing, the defendant rewrote the leaflet, although it contained the same information. The Court of Appeal held that there was still copyright infringement.

The most recent illustration of the difference between taking the ideas in another’s work and taking the expression can be found in Baigent & Lee v Random House Group Ltd [2007] FSR 579. The claimants alleged that the copyright in their book The Holy Blood and the Holy Grail had been infringed by the defendant having published The Da Vinci Code. It was held that even if the defendant’s book had taken the general themes alleged to exist in the claimants’ work, these were too general or of too low a level of abstraction to be capable of copyright protection. The Court of Appeal subsequently confirmed this. Lloyd LJ remarked that although there is a crucial distinction between an idea and its expression, no clear principle ‘is or could be laid down… to tell whether what is sought to be protected is on the ideas side of the dividing line, or on the expression side’.

Activity 6.5Is it possible to reconcile the approach of the Privy Council in Green with that of the Court of Appeal in Mandops?

Why do you think that the Court of Appeal was ‘clearly sympathetic to the claimant’.



u understand how copyright law has often developed in response to technological change

u describe the external influences which have shaped United Kingdom copyright law

u compare the key features of copyright law with those of other intellectual property rights

u evaluate the principal justifications for the existence of copyright protection

u discuss the difference between an idea and its expression.

Sample examination question‘The imprecision of any line between idea and expression causes our leading authors to castigate the whole notion. Why then does the distinction survive disparagement?’ (Cornish)

Discuss.

Advice on answering the questionA good answer will:

u explain the nature of copyright (protection against copying for works which are original)

u deal briefly with the justifications for copyright

u consider how the law must strike a balance between the interests of the copyright owner and the interests of society

u consider how the idea/expression dichotomy is an aspect of this, so that ideas may be freely copied but the investment of the creator in the expression is protected

u give examples of how it may be difficult in practice to draw a clear line between idea and expression

u consider in some detail the leading case of Baigent & Lee v Random House and evaluate in particular the comments of Lloyd LJ and Mummery LJ about the difficulty of separating ideas from their expression

u come to a conclusion.


Reflect and review








Need to study again

I understand how copyright law has often developed in response to technological change.

¢ ¢ ¢

I understand how copyright law has often developed in response to technological change.

¢ ¢ ¢

I can describe the external influences which have shaped United Kingdom copyright law.

¢ ¢ ¢

I can compare the key features of copyright law with those of other intellectual property rights.

¢ ¢ ¢

I can evaluate the principal justifications for the existence of copyright protection.

¢ ¢ ¢

I can discuss the difference between an idea and its expression.

¢ ¢ ¢


Must revise

Revision done

6.1 The history of copyright protection in the United Kingdom

¢ ¢

6.2 Copyright compared with other intellectual property rights

¢ ¢

6.3 The justification for copyright protection ¢ ¢

6.4 The nature of copyright and the idea/expression divide ¢ ¢

Note down in your Skills portfolio how useful you found this reflect and review page.


Notes

Contents

Introduction 82

7 1 Categoriesofcopyrightwork 83

7 2 Therequirementoforiginality 88

7 3 Therequirementofpermanentform 91

7 4 Qualificationforprotection 92

7 5 Authorshipandownership 93

7 6 Duration 95

Reflectandreview 97

7 Subsistence of copyright


Introduction

The purpose of this chapter is to set out what qualifies as a copyright work for the purposes of United Kingdom law. The categories which receive protection are listed in section 1 of the Copyright, Designs and Patents Act 1988 (CDPA) but, as will become apparent, the statute gives little guidance as to the precise meaning of those categories. It will therefore be necessary to resort to case law for a fuller explanation.

Once the types of work have been identified, the chapter will proceed to examine the conditions which must be satisfied in order for copyright protection to arise. In essence, these are that the work must be original, that it must be recorded in permanent form and that the author of the work must be a qualifying person. It is important that you learn to appreciate the difference between the author of the work and the person who owns the copyright in it. These two may not be the same person, and different consequences attach to each status.

Last, but in outline only, the chapter will deal with the rules on duration. As explained in Chapter 6, the rules on duration of copyright can be complex in practice. However, you should assume for the purposes of the examination that all the relevant works have been created since the coming into force of the CDPA.

You will discover that the principles of copyright law are straightforward. However, the United Kingdom copyright system is beset by a mass of detail, such that it is easy to lose sight of the basic rules. You should therefore concentrate on understanding the types of work which attract copyright protection and the rules which must be satisfied for protection to arise.


u summarise the principal categories of copyright works

u explain the criterion of originality in copyright law and the need for permanent form

u explain the rules which determine when a work qualifies for protection in United Kingdom law

u explain and apply the concepts of authorship and ownership

u list all the matters which have to be established in order for United Kingdom copyright to subsist.

Intellectual property 7 Subsistence of copyright page 83

7.1 Categories of copyright work

Essential reading ¢ Bainbridge, Chapter 3: ‘Subsistence of Copyright’ pp.39−70.

¢ Bently and Sherman, Chapter 3: ‘Subject Matter’ pp.58−90.

¢ Cornish, Chapter 11: ‘Subsistence of Copyright’ paras 11-01 to 11-31

¢ Norman, Chapter 8: ‘Subsistence of Copyright’ sections 8.1 and 8.2.

¢ CDPA sections 1–8.

¢ Cases: University of London Press v University Tutorial Press [1916] 2 Ch 601; Ladbroke v William Hill [1964] 1 WLR 273 (HL); Francis Day v Twentieth Century Fox [1940] AC 112 (HL); Sawkins v Hyperion Records [2005] 1 WLR 3281; Bauman v Fussell (1953) [1978] RPC 485; Antiquesportfolio.com Ltd v Rodney Fitch & Co Ltd [2001] FSR 345; Lucasfilm Ltd v Ainsworth [2009] FSR 103 (MannJ), [2009] EWCA (Civ) 1328 (CA).

¢ Lupton, K. ‘Photographs and the Concept of Originality in Copyright Law’ [1988] EIPR 257.

¢ Garnett, K. and A. Abbott ‘Who is the “Author” of A Photograph’ [1998] EIPR 204.

Section 1(1) of the CDPA (as amended by the Copyright and Related Rights Regulations 2003) declares that ‘Copyright is a property right which subsists in accordance with this Part in the following descriptions of work’ and then proceeds to list the categories of copyright work that are recognised under United Kingdom law. Read the section now.

Each of the works listed in this provision receives separate treatment in the sections which follow. The effect of the 2003 Regulations was to delete all references to ‘cable programmes’ in the CDPA.

We shall look at each category of copyright work individually.

7.1.1 Literary worksThe definition of a literary work is in section 3 of the CDPA. Read the whole of section 3 carefully now.

We shall look at subsections (2) and (3) in due course. The following comments can be made about section 3(1) of the CDPA.

u Literary, dramatic and musical works are treated as three distinct categories because of the phrase ‘other than’ which appears in the definition of literary work.

u A literary work can be written, spoken or sung (‘writing’ is defined by section 178 as including any form of notation or code, whether by hand or otherwise and regardless of the method by which, or medium in or on which, it is recorded, and ‘written’ is to be construed accordingly). How copyright can be accorded to the spoken word will be dealt with under the requirement of originality, below.

u Various items are said to be included within the term ‘literary work’ (tables or compilations, computer programs and their preparatory materials, and databases).

The CDPA does not provide any further guidance as to what is a literary work. Such guidance is to be found in case law. The leading decision is that in University of London Press v University Tutorial Press [1916] 2 Ch 601. Peterson J explained that the word ‘literary’ indicated something which was written or printed on paper, and that the style or quality did not have to be high. As a result, very mundane items are protected by copyright, such as football pools coupons (Ladbroke v William Hill [1964] 1 WLR 273), lists of television programmes (Independent Television Publications v Time Out [1984] FSR 64), examination papers (University of London Press case) and telegraphic code (Anderson & Co v Lieber Code Co [1917] 2 KB 469). The textbooks all contain further examples.


You should be aware that according copyright protection to everyday items has implications for competition law. This is because the copyright owner can refuse to license others to exploit the work or may only agree to licences being granted on exorbitant terms. Such a refusal can be a breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU) (formerly Article 82 EC) (abuse of a dominant position): Case C-241-2/91 P RTE v Commission (Magill intervening) [1995] ECR I-743. The ECJ restated the Magill principles in Case C-418/01 IMS Health GmbH v NDC Health GmbH [2004] ECR I-5039 which was concerned with IMS’s alleged copyright in a database of regional sales information about pharmaceutical products and its refusal to license others. The ECJ declared that:

‘In order for the refusal to be regarded as an abuse, three conditions had to be fulfilled. First, the undertaking requesting the licence must intend to offer new products not offered by the copyright owner and for which there is a potential consumer demand. Second, the refusal could not be justified by objective considerations. Last, the refusal had to be such as to reserve the relevant market to the copyright owner by eliminating all competition on that market. It was for the national court to determine whether all those conditions were fulfilled.’

Even though a literary work is defined in the cases as anything on paper, there is a threshold below which the ‘work’ will not attract protection. Consequently, there is no copyright under United Kingdom law in the title of a song (Francis Day v Twentieth Century Fox [1940] AC 112), nor in an invented word trade mark (Exxon Corporation v Exxon Insurance Consultants [1981] 3 All ER 241) nor in everyday factual information, such as that given in the front of a diary (Cramp v Smythson [1944] AC 329). The one decision which is in contrast to these is Shetland Times v Jonathan Wills [1997] FSR 604, where it was assumed for the purpose of granting interim relief that newspaper headlines were copyright. The decision should be treated with caution.

Activities 7.1–7.27.1 Read the judgment of Peterson J in University of London Press v University

Tutorial Press. Then write a concise summary of what he says about the meaning of the phrase ‘literary work’.

7.2 Read the decision of the Court of Appeal in Exxon Corporation v Exxon Insurance Consultants. What does the case tell you about the threshold for copyright protection?

No feedback provided to either activity.

7.1.2 Dramatic workSection 3(1) of the CDPA declares that a dramatic work includes a work of dance or mime. Reference to case law tells us that a dramatic work requires some sort of presentation or delivery (Fuller v Blackpool Winter Gardens [1895] 2 QB 429) and that it is a work of action capable of being performed before an audience (Norowzian v Arks Ltd [1999] FSR 79 (Rattee J); [2000] FSR 363 (CA)). Presumably the performance must be by a human being, as a video game has been held not to be a dramatic work: Nova Productions Ltd v Mazooma Games Ltd [2007] RPC 589. In Green v Broadcasting Corp of New Zealand [1989] RPC 700 the format for a TV game show was held not to be a dramatic work, the court assuming that it was not sufficiently detailed.

7.1.3 Musical workUnhelpfully, section 3(1) defines a musical work as ‘a work consisting of music, exclusive of any words or action intended to be sung, spoken, or performed with the music’. This does at least make clear that under United Kingdom law (though not necessarily the laws of other countries) there are separate copyrights in the words and music of a song (which of course may be owned by different people). The 1988 Act definition can be contrasted with that found in the Copyright Act 1911, which defined a musical work as ‘any combination of melody and harmony reduced to writing’.


Again, for musical works, the threshold for protection is very low. A four-chord sequence used as the ‘ident’ for a television channel was held to be a copyright work in Lawson v Dundas 12 June 1985, unreported. In Bamgboye v Reed [2004] EMLR 61, the addition of a drum accompaniment to a piece of music was sufficient to confer protection on the claimant. By contrast, in Coffey v Warner/Chappell Music Ltd [2005] FSR 747 the singer’s vocal expression, pitch contour and syncopation were held not capable of being regarded as a copyright work because they were not sufficiently separable from the remainder of the work to constitute a musical work in their own right. Equally, because of section 3(2) and (3) (discussed below), music doesn’t have to be formally written down at the outset in order to qualify as a work: Hadley v Kemp [1999] EMLR 589.

There is a detailed discussion of musical copyright by Mummery LJ in Sawkins v Hyperion Records [2005] 1 WLR 3281.

Activity 7.3Read the judgment of Mummery LJ in Sawkins v Hyperion Records and then compare it with those parts of the judgment of Park J in Hadley v Kemp dealing with copyright. Write a concise summary of the differences between the two as to the role of a performer in creating a musical work.


7.1.4 Artistic workWhat amounts to an artistic work under United Kingdom law is set out in section 4 of the CDPA. Read the whole section carefully now. The following observations can be made.

u The section covers both two-dimensional and three-dimensional items.

u Those items mentioned in paragraph (a) are stated to be irrespective of artistic quality.

u Some of the key words in section 4 are defined further in the section, others are not.

u ‘Graphic work’ is widely defined. However, the commercial importance of drawings, etc. as copyright works is considerably reduced because of section 51 of the CDPA, which restricts the copyright owner’s ability to sue for infringement where another makes articles based on the drawing. This is considered further in Chapter 9 on designs.

Case law helps us to understand what some of the words and phrases used in section 4 mean. A painting could be defined as a ‘representation or depiction by colours on a surface’, yet the make-up of the pop star ‘Adam Ant’ was considered not to be a painting in Merchandising Corporation of America v Harpbond [1983] FSR 32 because it was not permanent. Lack of permanence was the reason for copyright protection not being accorded in J & S Davis v Wright [1988] RPC 403 (where it was unsuccessfully argued that dental impression trays were sculptures) and in Creation Records v News Group Newspapers [1997] EMLR 444 (where it was accepted that a collection of articles to be photographed for a CD cover, had it been permanent, would have been either a collage or a sculpture). In Metix (UK) Ltd v G.H. Maughan (Plastics) Ltd [1997] FSR 718, Laddie J thought it not possible to say with precision what comprises a sculpture but accepted counsel’s suggested definition of a three-dimensional work made by an artist’s hand.

The word ‘drawing’ has received a wide interpretation. ‘Drawings’ include a logo for a mobile phone network (Hutchinson Personal Communications v Hook Advertising [1995] FSR 365), architect’s plans (Jones v London Borough of Tower Hamlets [2001] RPC 407), a cartoon character (King Features Syndicate Inc v O & M Kleeman Ltd [1941] AC 417), drawings for machine parts (British Northrop v Texteam Blackburn [1974] RPC 57) and fashion sketches (Bernstein v Sidney Murray [1981] RPC 303).

The treatment of photographs as copyright works has presented the courts with some


difficulty. Technology has moved on since Graves’ Case (1869) LR 4 QB 715 where it was assumed that the amount of effort needed to take a photograph justified copyright protection. What you should remember is that being the author of a photograph does not entitle someone to stop others taking their own photograph of the same scene. Even if a photograph is copied directly (as happened in Bauman v Fussell (1953) [1978] RPC 485, a case which is frequently misunderstood) it has to be shown that there was substantial taking in accordance with the requirements of copyright infringement. Antiquesportfolio.com Ltd v Rodney Fitch & Co Ltd [2001] FSR 345 contains a useful summary of the law on photographic copyright.

Activity 7.4Read the decision in Antiquesportfolio.com Ltd v Rodney Fitch & Co Ltd and the articles by Lupton and Garnett & Abbott listed above. Then write a concise summary of the issues surrounding photographic copyright.


It should not be assumed that the words ‘engraving’ and ‘etching’ refer only to methods of producing pictures. In Wham-O Manufacturing Co v Lincoln [1985] RPC 127 it was held that the decorative grooves cut into the surface of a frisbee fell into this category of artistic work, as did the pattern cut into rubber car mats in Hi-Tech Autoparts Ltd v Towergate Two Ltd [2002] FSR 254.

Likewise, when you see the word ‘buildings’ in section 4 of the CDPA, you should not assume that the word only refers to grand public buildings like cathedrals or art galleries. The word includes everyday buildings like shops or houses (Meikle v Maufe [1941] 3 All ER 144; Hay v Sloan (1957) 12 DLR 2d 397).

The most problematic phrase in section 4 is ‘works of artistic craftsmanship’. This involves two interrelated concepts, both of which must be satisfied: an element of artistry and an element of craftsmanship. The leading decision is Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64, but in many ways this is an unsatisfactory case, for a number of reasons.

u Counsel for the defendant conceded that the work in question was one of craftsmanship (it had been made by hand by the claimant’s employees) so the meaning of ‘craftsmanship’ is not discussed.

u Although there appears to be some sort of consensus that ‘artistic’ means ‘eye appeal’ (i.e. does the article look nice), each of the Law Lords suggests a different test for deciding this.

u Strictly speaking, all the comments are obiter as it was held that no copyright subsisted in the claimant’s design for furniture as the prototype sofa and chairs had been destroyed once manufacture commenced.

Subsequent cases have provided some clarification. In Merlet v Mothercare plc [1986] RPC 115 it was held at first instance (and endorsed by the Court of Appeal) that the issue of ‘eye appeal’ is to be determined by the intention of the author (i.e. did the creator of the work intend it to look nice). In Vermaat v Boncrest Ltd [2001] FSR 43, it was held (reversing older, doubtful authority) that it was not necessary for one person to supply both the artistry and craftsmanship: it could be provided by a team. In the instant case, even though there was the requisite element of manual skill, the articles in question (bedspreads) lacked eye appeal. One of the few examples where it has been claimed successfully that a work is one of artistic craftsmanship is Shelley Films v Rex Features [1994] EMLR 134, where film costumes, sets and masks were held to be such. The importance of being able to claim that what has been created is a work of artistic craftsmanship will be considered further in Chapter 9 on designs.

For a useful discussion on what amounts to a ‘sculpture’ and a ‘work of artistic craftsmanship’, together with a review of the earlier case law, the judgment of Mann J in Lucasfilm Ltd v Ainsworth [2009] FSR 103 (subsequently confirmed by the Court of Appeal, [2009] EWCA (Civ) 1328) should be studied carefully.


Activity 7.5Read that part of the judgment of Mann J in Lucasfilm Ltd v Ainsworth where he considers what amounts to a ‘work of artistic craftsmanship’ and a ‘sculpture’. What are the key characteristics of each type of work?


7.1.5 FilmsCDPA section 5B defines a film as a recording on any medium from which a moving image may be produced by any means. The key elements of this are the words ‘recording’, ‘any medium’ and ‘moving image’. The section also provides for dual protection for film soundtracks: they are to be treated as part of the film, and also treated as a sound recording. Remember that within a film, there will be other copyright works, such as the story, the dialogue, the music, costume design and so on.

7.1.6 Sound recordingsCDPA section 5A defines a sound recording as a recording of sounds, from which sounds may be reproduced or a recording of the whole or part of a literary, dramatic or musical work, from which sounds reproducing the work or part may be produced, regardless of the medium on which the recording is made or the method by which the sounds are reproduced or produced. The key words are ‘sounds’ (it does not have to be a recording of music), ‘from which sounds may be reproduced’ and ‘regardless of the medium’. Again, a sound recording may well contain other copyright works, such as words, music, the arrangement of the music, and so on.

7.1.7 BroadcastsBroadcasting in the United Kingdom is regulated by the Broadcasting Acts 1990 and 1996 and is also subject to a number of EU directives. A broadcast is defined by section 6 (as amended by the Copyright and Related Rights Regulations 2003) as:

an electronic transmission of visual images, sounds or other information which is (a) transmitted for simultaneous reception by members of the public and is capable of being lawfully received by them, or (b) is transmitted at a time determined solely by the person making the transmission for presentation to members of the public, but not any internet transmission unless it is (a) a transmission taking place simultaneously on the internet and by other means, (b) a concurrent transmission of a live event, or (c) a transmission of recorded moving images or sounds forming part of a programme service offered by the person responsible for making the transmission, being a service in which programmes are transmitted at scheduled times determined by that person.

This revised definition reverses the decision in Shetland Times v Jonathan Wills [1997] FSR 604 which was to the effect that a website was a broadcast.

7.1.8 Published editionsCDPA section 8 provides protection for the published editions of literary, dramatic or musical works which do not reproduce the typographical arrangement of a previous edition. This protection relates to the way in which a publisher chooses to set out text on the printed page. In respect of any of the textbooks you are using, the publisher will have protection under section 8 for their investment in the ‘typographical arrangement’. This will be separate from the copyright in the underlying work, indeed the underlying work could be one in which copyright never existed or in which the copyright has expired (so that a publisher could have copyright in the layout of a new edition of Shakespeare’s plays).

The word ‘edition’ in section 8 was given a narrow meaning by the House of Lords in Newspaper Licensing Agency Ltd v Marks & Spencer plc [2003] AC 551. In the case of a newspaper, it is the whole edition, not individual sections or articles. Copyright under section 8 is conferred only on publishers in respect of the layout of printed editions of books, periodicals, plays and music. A typeface (as opposed to the layout of the printed page) is protected as an artistic work.


Activity 7.6Go over your notes on the categories of copyright work. Then, in respect of each one, provide the statutory definition (if one exists in the CDPA) together with any key cases which explain the nature of the work.

Category of work Definition

Literary

Dramatic

Musical

Artistic

Films

Sound recordings

Broadcasts

Printed editions



u summarise the principal categories of copyright works.

7.2 The requirement of originality


¢ Bently and Sherman, Chapter 4: ‘Criteria for Protection’ pp.91−102.

¢ Cornish, Chapter 11: ‘Subsistence of copyright’ paras 11-06 to 11-10, 11-13 to 11-15.

¢ Norman, Chapter 8: ‘Subsistence of Copyright’ section 8.3.

¢ Cases: Cala Homes v Alfred McAlpine Homes East Ltd [1995] FSR 818; Walter v Lane [1900] AC 539; Express Newspapers v News (UK) [1990] 3 All ER 376; Sawkins v Hyperion Records [2005] 1 WLR 3281; Case C-203/02 British Horseracing Board v William Hill Organisation Ltd [2004] ECR I-10415.

¢ Phillips. J. ‘Copyright in Spoken Words – Some Potential Problems’ [1989] EIPR 231.

Useful further reading ¢ Brennan, D.J. and A. Christie ’Spoken Words and Copyright Subsistence in Anglo-

American Law’ [2000] IPQ 309.

¢ MacQueen, H ‘“My tongue is mine ain”: Copyright, the Spoken Word and Privacy’ (2005) 68 MLR 349

Section 1 of the CDPA declares that copyright subsists in original literary, dramatic, musical and artistic works. Originality is therefore a condition for their protection. The leading case (already discussed above) is University of London Press v University Tutorial Press. From your reading of the case you should be aware that Peterson J explains that ‘originality’ does not indicate creativity or intellectual effort. It simply means that the work must originate with the author. It must be ‘not copied’. Some cases express this requirement in a slightly different way by asking whether the author has expended the minimum amount of skill, labour and judgment necessary to attract copyright. However, the amount of such effort required to obtain copyright protection is relatively small.

Read University of London Press v University Tutorial Press and make notes on it now.


With regard to other categories of copyright work (films, sound recordings, broadcasts and typographical arrangements) the relevant sections which define these works all declare that copyright does not subsist in a film etc which is, or to the extent that it is, a copy taken from a previous film, etc. (see section 5(B)(4), section 5(A)(2), section 6(6) and section 8(2)). There is some disagreement in the textbooks as to the meaning of this phrase, but arguably it imposes the requirement of originality for these four types of work.

The requirement of originality raises a number of challenges.

7.2.1 Revising the workWhere a work is updated or revised, the issue is whether the author expended enough effort for the revision to attract fresh copyright (which would have the effect of prolonging the term of protection). Three cases provide useful illustrations. In Interlego v Tyco [1989] AC 217 it was held that changes made to the working drawings for LEGO bricks were so minimal that no fresh copyright was obtained. By contrast, in Cala Homes v Alfred McAlpine Homes East Ltd [1995] FSR 818, revisions to architect’s plans for suburban houses were enough for the claimant to be able to claim copyright in the revisions, so that they could sue the defendant for infringement. In Sawkins v Hyperion Records [2005] 1 WLR 3281, the claimant, a renowned musical scholar, had created orchestrations of French classical music. His efforts in researching compositions which had never had the benefit of copyright protection conferred on him copyright in his arrangements (even though he didn’t write any new notes) which the defendant had infringed by making and issuing records.

7.2.2 Adapting someone else’s workWhere what might be termed ‘secondary activity’ is carried out, such as translating, arranging or adapting someone else’s work, the person who carries out such activity may simultaneously acquire copyright with regard to what they have created, yet at the same time infringe the source work because they have taken substantially from it: ZYX Music v King [1995] 3 All ER 1, [1997] 2 All ER 129. The fact that they are an infringer does not prevent the claimant from enforcing their own copyright against a third party. Substantial taking in the context of copyright infringement is considered in Chapter 8.

7.2.3 Compilations, anthologies and collectionsA compilation of other works is of itself a copyright work: Ravenscroft v Herbert [1980] RPC 193. However, where the works which have been collected are themselves copyright, the compilation will infringe unless permission has been obtained first. Whether a compilation is original in the copyright sense depends on the amount of effort expended on its assembly. A random collection of poems will not attract copyright, but an anthology which shows taste and judgment in the selection of the individual poems will (Macmillan & Co. Ltd v R & J Cooper (1923) 93 LJPC 113; Macmillan v Co. Ltd v Suresh Chunder Deb (1890) ILR 17 Calc 951).

The protection of compilations extends to assembling a directory, such as a list of qualified solicitors. The threshold for protection under United Kingdom law was low, depending in some cases simply on the ‘sweat of the brow’ in collecting the information: Waterlow v Reed [1992] FSR 409, Waterlow v Rose [1995] FSR 207. However, a higher threshold of creativity was imposed by the US Supreme Court in Feist Publications v Rural Telephone Service Co (1991) 111 Sup Ct 1282, which concerned a telephone directory.

The United Kingdom case law on compilations should be reconsidered in the light of Council Directive 96/9 on the legal protection of databases [1996] OJ L 77/20, as implemented by the Copyright and Rights in Databases Regulations 1997. The Directive creates a two-tier system of protection for databases, dependent on whether intellectual activity was involved in the creation. Hence today a collection of information may amount to (a) a compilation protected by the law of copyright; (b) a

Read Articles 1, 3 and 7 of the Database Directive now.


database (as defined in Article 1 of the Directive) in which copyright exists (by virtue of Article 3 of the Directive) because of intellectual creation; (c) a database (as defined in Article 1 of the Directive) in which the sui generis database right exists (by virtue of Article 7 of the Directive) (because of substantial investment).

Article 7 of the Directive (the sui generis right) was accorded a very narrow interpretation by the ECJ in Case C-203/02 British Horseracing Board v William Hill Organisation Ltd [2004] ECR I-10415. In particular the ECJ adopted a narrow view as to what constitutes ‘investment’ in ‘obtaining and verifying’ data (‘resources used to seek out existing independent materials’ and ‘resources used to monitor the accuracy of the materials collected when the database was created’). It also adopted a narrow view of what is a ‘substantial part evaluated qualitatively and quantitatively’ (the test for infringement in the Directive). This means respectively ‘the volume of data extracted assessed in relation to the total volume of the contents’ and ‘the scale of the investment in the obtaining, verification, or presentation of the contents of the subject of the act of extraction etc, regardless of whether that subject represents a quantitatively substantial part of the general contents of the protected database’. There is no infringement unless a substantial part is taken. By contrast the Court took a broader view of what is ‘extraction’ and ‘utilisation’ (‘any unauthorised act of appropriation’ even if the database maker has made the contents accessible to the public). The views expressed in the British Horseracing Board case have been reiterated by the ECJ in Case C-304/07 Directmedia GmbH v Albert-Ludwigs-Universität Freiburg [2008] ECR I-7565 and Case C545/07 Apis-Hristovich EOOD v Lakorda AD [2009] 3 CMLR 82.

Activity 7.7Read the ECJ’s ruling in the British Horseracing Board case. What impact does the ruling have on affording intellectual property protection on collections of information?

7.2.4 Reporter’s copyrightWhen the definition of ‘literary work’ was considered (in 7.1.1 above) it was noted that such a work may be ‘written, spoken or sung’. How can there be copyright in the spoken word? The answer lies in the remaining provisions of section 3 of the CDPA.

Consider the scenario of a politician or celebrity making a speech or giving an interview, which is then recorded by a reporter. Because of the wording of section 3, there may be both copyright in the spoken word (once recorded, whether in writing or otherwise, for example by a tape recorder) and copyright in the report of the speech if the latter has enough originality. The old decision of Walter v Lane [1900] AC 539 had been much criticised for holding that the reporter who had taken shorthand notes of a series of political speeches had copyright in the report of the speech. It was argued that the decision was flawed as the politician had not been a party to the litigation and because at the time there had not been a requirement of originality in United Kingdom legislation (it was introduced by the 1911 Act). However, the thinking in Walter v Lane has been confirmed in Express Newspapers v News (UK) [1990] 3 All ER 376. The interviewee had copyright in the words (which were recorded by the journalist in accordance with section 3(2) and (3)) and the journalist, having expended skill, labour and judgment in editing the report of the speech had separate copyright in the report. You should compare this with the outcome in Sawkins v Hyperion Records discussed above. However, consider what the outcome might be if the journalist had simply acted as an ‘amanuensis’ (a scribe) and had added nothing of their own creativity when reporting the interview.

Activity 7.8Read the article by Jeremy Philips on copyright in the spoken word and then review your notes on Walter v Lane and Express Newspapers v News (UK). Then consider whether, in the light of the current wording of section 3 of the CDPA, the criticisms of Walter v Lane are justified.


Read the whole of section 3 of the CPDA again carefully now.


7.3 The requirement of permanent form



¢ Cornish, Chapter 11: ‘Subsistence of Copyright’ paras 11-32 to 11-34.

¢ Norman, Chapter 8: ‘Subsistence of Copyright’ section 8.4.1 and 8.4.2.

7.3.1 No formalitiesThe Berne Convention 1886 obliges Contracting States not to impose any formalities as a precondition of copyright protection. There can be no system of registration. Protection arises automatically once the work is complete, by which is meant that there is something which can be copied (a rather obvious point, as copyright exists to prevent copying). By contrast, the Universal Copyright Convention 1952 and the Rome Convention on the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961 require the affixation of a copyright notice to the work (the author’s name, the date of publication and either © or respectively).

7.3.2 The work must be recordedAs regards literary, dramatic and musical works, section 3(2) of the CDPA provides that copyright shall not subsist unless and until the work is recorded in writing or otherwise (the definition of ‘written’ can be found in section 178, the general definition section for Part I of the CDPA). Is the phrase ‘or otherwise’ limited to forms of recording which are eiusdem generis as ‘writing’ or does the phrase encompasses all forms of fixation? We have already considered the wording of section 3(3) which provides that the recording can be done by someone else, either with or without the permission of the author. If you are unclear on this point, reread your notes on Walter v Lane and Express Newspapers v News (UK). Consider also the outcome of Hadley v Kemp [1999] EMLR 589 as regards the ‘fixation’ of musical works which have not previously been written down: it was held that the defendant had completed the writing of the songs ‘in his head’ and that they were put into permanent form when the group made the first ‘demo’ tape of the song in the recording studio. This points to any form of recording (whether or not on paper) as being sufficient.

We have already noted above that as regards artistic works, some cases have used the absence of permanent form as a means of denying copyright protection. As an example, refer to the decision in Hensher Ltd v Restawile Upholstery (Lancs) Ltd [1976] AC 64 above.

With regard to other categories of copyright work, the definitions of ‘film’ and ‘sound recording’ in section 5 of the CDPA both utilise the word ‘recording’, implying a degree of permanence. Similarly, in respect of printed editions, as section 8 declares that these must be published in order to be protected, this too implies that there must be a permanent record of the work. The one exception would seem to be broadcasts. There is no mention in section 6 of the CDPA of any requirement of permanent form. It is possible to have a live broadcast (for example, a news bulletin) but, despite the lack of permanent form, it will still be protected as a copyright work. Most broadcasts, in fact, are pre-recorded. Like films and sound recordings, they will usually contain other copyright works.

Activity 7.9Discuss whether B or his successors can claim copyright in the appropriate work in the following circumstances.

a. B, a famous author, dictates his latest novel onto an MP3 recorder for his secretary to transcribe at a later date. Before the word-processing is completed, B dies.


b. C delivers a political address during an election campaign. B, a reporter at the meeting, takes shorthand notes which he later transcribes. Would it make any difference if C delivered his speech ex tempore (off the top of his head) or from prepared notes?

c. B, a famous mime artist, creates a new sketch. One of his performances is filmed (with his consent) but the sketch is never written down.

d. B improvises a tune in front of his friend D; D memorises the tune, goes home, writes it down, adds words to it and then has it published as his own composition.

e. B composes a pop song, but being unable to write music, makes a ‘demo’ tape of it. Later he goes into a recording studio where E, the recording engineer, hears him rehearsing the song. E goes away and writes down the music and has it published as his own composition.


u explain the criterion of originality in copyright law and the need for permanent form.

7.4 Qualification for protection



¢ Cornish, Chapter 11: ‘Subsistence of copyright’ paras 11-35 to 11-41.

¢ Norman, Chapter 8: ‘Subsistence of copyright’ sections 8.4.3 to 8.4.6

¢ CDPA sections 153–160.

The Berne Convention 1886, the Universal Copyright Convention 1952 and the Rome Convention on the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961 all contain the principle of national treatment. As explained in Chapter 2, this means that Contracting States must accord the same protection to nationals of other Contracting States as they accord to their own nationals. If you are unsure about the principle of national treatment, revisit your notes on Chapter 2.

The United Kingdom gives effect to its obligations under these Conventions and the WTO’s TRIPs Agreement in sections 153–160 CDPA. The effect of these sections can be summarised thus: an author may claim United Kingdom copyright if it can be shown that the author or the work are in some way connected to the United Kingdom or a country to which the 1988 Act extends (dependent colonies or territories) or a country to which the Act applies (that is, Contracting States of the relevant conventions – hereafter ‘convention countries’). These conventions are incorporated into United Kingdom law by virtue of section 159 of the CDPA and a series of statutory instruments which list the relevant Contracting States. For what happens when a new country accedes to the Berne Convention, see Article 18 of that Convention.

Where United Kingdom copyright is being claimed on the basis of the author being connected to the United Kingdom, it must be ascertained first whether the work was unpublished or published. In the former situation, it must be determined whether s/he was a qualifying person when the work was made. In the latter situation, the question is whether s/he was a qualifying person at the time of first publication (CDPA sections 154 and 159). Whether someone is a ‘qualifying person’ depends on whether the author was a citizen of or was domiciled in or was resident in the United Kingdom or a country to which the Act extends or a country to which the Act applies at the relevant date.


Where United Kingdom copyright is being claimed on the basis of the work being connected to the United Kingdom, the issue is simply whether it was first published in a Convention country (CDPA sections 155 and 159). ‘Publication’ is defined in CDPA section 175, which is derived from the ruling in Francis Day & Hunter v Feldman & Co. [1914] 2 Ch 728. Read section 175 now. Note too what does not constitute publication. You should also read the rules on ‘simultaneous publication’ in section 155(3).

The above rules apply to literary, dramatic, musical and artistic works and films (that is, those works covered by the Berne Convention). As regards sound recordings, the same rules apply as for other forms of copyright work, but the relevant Convention is the Rome Convention not Berne. In relation to broadcasts, under section 156 there is only one ‘connecting factor’, namely, the place of broadcast. As regards printed editions, the requirement is that the publisher must be a qualifying person or else first publication must have been in a convention country.

Activity 7.10A, a citizen of Ruritania, writes a mathematics textbook in 2001. Ruritania does not adhere to the Berne Convention. Discuss whether he can claim copyright protection under United Kingdom law in the following circumstances.

a. The book is never published.

b. The book is only published in Ruritania.

c. The book is first published in Ruritania, but is subsequently published in the Falkland Islands.

d. The book is only published in Ruritania, which subsequently adheres to the Berne Convention.


u explain the rules which determine when a work qualifies for protection in United Kingdom law.

7.5 Authorship and ownership

Essential reading ¢ Bainbridge, Chapter 4: ‘Authorship and Ownership’ pp.85−102.

¢ Bently and Sherman, Chapter 5: ‘Authorship and First Ownership’ pp.119–34.

¢ Cornish, Chapter 12: ‘Infringement of Copyright and Moral Rights’ paras 12-01 and 12-02.

¢ Norman, Chapter 8: ‘Subsistence of Copyright’ section 8.5.

¢ Cases: Stephenson, Jordan & Harrison v MacDonald & Evans (1952) 69 RPC 10; Beloff v Pressdram Ltd [1973] RPC 765; R Griggs Group Ltd and others v Evans and others [2005] FSR 706 (CA); Beckingham v Hodgens [2003] EMLR 376; Brighton & Dubbeljoint Co Ltd v Jones [2005] FSR 288.

As explained in Chapter 2, when considering the ownership of copyright, it is essential to distinguish the ownership of the physical medium containing the work from the ownership of copyright itself. The recipient of a letter will own the piece of paper, but the writer of the letter will own the copyright in it (Re Dickens [1935] Ch 267).

The CDPA contains a series of provisions dealing with ownership of copyright. These basic rules are just the starting point for determining who is the owner. In contrast to many civil law countries, under United Kingdom law, copyright is freely alienable. Many industries, particularly those involved with entertainment (such as films, television and music recording) and the media (books and newspapers) rely greatly on the use of standard form contracts to assign and license one or more of the rights


comprised in copyright works. The CDPA is therefore subject to the overriding effect of freedom of contract.

CDPA section 11(1) provides that the author (that is, the creator) of the work is first owner. Who is the author of the different categories of work is found in section 9. Read section 9 now. Observe how in relation to ‘entrepreneurial’ works (such as films, sound recordings, broadcasts, typographical arrangements and computer generated works) there are separate rules as to authorship. The only exceptions to the basic rule in section 11(1) are in section 11(2) (employees) and section 11(3) (Crown and Parliamentary copyright, and copyright belonging to various international organisations). As regards the meaning of the phrase ‘in the course of employment’ you should read the leading cases of Stephenson, Jordan & Harrison v MacDonald & Evans (1952) 69 RPC 10 and Beloff v Pressdram Ltd [1973] RPC 765. Consider also the comment of Mummery J in Noah v Shuba [1991] FSR 14 that a useful test of whether a work is created ‘in the course of employment’ is to ask whether the employee could have been ordered to produce the work.

Commissioned works

One commonly misunderstood point concerns works which are commissioned. By ‘commission’ it is meant that A asks B to write a book or a play or a piece of music or create an artistic work and agrees unconditionally to pay for the work in any event (Gabrin v Universal Music Operations Ltd [2004] ECDR 18). Where a work is commissioned, initial ownership does not belong to the commissioner in the absence of a written contract complying with section 91 of the CDPA (which deals with the formal assignment of future copyrights) although the commission may give rise to a claim for equitable ownership: R Griggs Group Ltd and others v Evans and others [2005] FSR 706 (CA). In the case of a commission, which is silent as to entitlement to the commissioned work, the court will imply such terms as are appropriate to give business efficacy to the contract (Griggs v Evans). This may result in the commissioner being given an exclusive licence to exploit the commissioned work or may result in the commissioner being declared the owner in equity. Much depends on the facts of the case.

Joint authorship

The CDPA section 10 deals with works of joint authorship. Read section 10 now. The definition of joint authorship is particularly narrow and requires that it must not be possible to identify the separate contributions of the authors. Consequently, if A and B have written a song, and A has created the words and B has composed the music, this is not a work of joint authorship: there are in fact separate copyrights. Equally, if C and D have written a book, but each has taken responsibility for particular chapters, again this is not a work of joint authorship, as their respective contributions can be identified.

There has been a significant amount of case law recently on joint authorship, prompted, no doubt, by the prospect of copyright royalties. The case law has clarified section 10 by holding that each alleged co-author ‘must share responsibility for the form of expression’ and make ‘a significant and original contribution to the creation of the work’. Hence in Fylde Microsystems v Key Radio Systems Ltd [1998] FSR 449, the claim for joint ownership failed, as correcting ‘bugs’ in software did not meet these criteria. Likewise, in Ray v Classic FM plc [1998] FSR 622, there was no joint authorship of a database of classical music. The claimant was solely responsible for the creation of the work. In relation to music copyright, the cases of Hadley v Kemp [1999] EMLR 589 and Lawson v Dundas 12 June 1985 both involved unsuccessful attempts to claim royalties. In each case the compositions were complete before the alleged co-author’s involvement in the creative process.

A more problematic decision is that in Beckingham v Hodgens [2003] EMLR 376 where the court did find that there was joint ownership. The decision should be questioned in view of the fact that it was possible to identify the separate contributions of claimant and defendant. Similar decisions can be found in Bamgboye v Reed, where the


claimant’s contribution was the addition of drum accompaniment to a tune called ‘Bouncing Flow’ and in Fisher v Brooker [2009] 1 WLR 1764, where the House of Lords restored the original judgment of Blackburne J that the claimant was entitled to 40 per cent of the ownership of the 1967 hit A Whiter Shade of Pale as a result of having composed the distinctive organ solo. The outcome of each of these three cases (to the effect that there was entitlement to joint authorship) should be questioned in view of the very precise wording of section 10 CDPA.

By contrast, in Brighton & Dubbeljoint Co Ltd v Jones [2005] FSR 288, Park J held that there was no joint ownership because the changes made by B to the script for a play were of the sort to be made by a director, and in any event J had the final say as to whether these changes were to be accepted.

Where there is joint authorship of a work, then the rights of the joint authors are set out in section 173(2) of the CDPA.

Sometimes (because of the lack of registration in copyright) it may be difficult to determine who is entitled to a work. Section 104 of the CDPA contains various presumptions as to the existence and ownership of copyright. The effect of the section is in relation to the burden of proof: the onus is on the defendant to disprove the claimant’s title.

Activity 7.11What is the relationship between ownership and authorship of copyright?

7.6 Duration


¢ Bently and Sherman, Chapter 7: ‘Duration of Copyright’ pp.160−69.

¢ Cornish, Chapter 11: ‘Subsistence of Copyright’ paras 11-42 to 11-55.

¢ Norman, Chapter 3: ‘Subsistence of Copyright’ section 8.6

The EU Copyright Term Directive (aimed at standardising the period of copyright protection throughout the Member States) has had a major impact on the CDPA. As it added 20 years to the term of protection, a distinction must be drawn between those works created after the effect of the change (1 July 1995), those works already in copyright at the date of the change (‘existing works’ which received ‘extended protection’) and those works for which the copyright term had expired between 1 July 1975 and 1 July 1995 which attract ‘revived’ copyright. There are complex transitional provisions (dealing with extended and revived copyright), the details of which need not concern you. An example of these in operation can be found in Sweeney v Macmillan Publishers Ltd [2002] RPC 651. The case is a good illustration of how different versions of a novel can give rise to separate copyrights, each of which had different terms of protection because of the provisions in earlier legislation. The CDPA Sched.1 para 12 standardises the duration of certain categories of works (e.g. unpublished works) which were originally protected under the 1956 Act but which had anomalous periods of protection.

As regards literary, dramatic, musical and artistic works, the period of copyright protection is the author’s lifetime plus 70 years from the end of the calendar year in which s/he died (section 12 of the CDPA). This is subject to the condition that the author is an EEA national or the work’s ‘country of origin’ (as defined in section 15A) is an EEA state. If this is not the case, then the term of protection is to be that laid down by the law of the country of origin. Exceptions exist for works of unknown authorship (which are protected for 70 years from creation or 70 years from being made available to the public, provided that being made available happened within 70 years of creation); and computer-generated works (which are protected for 50 years from creation).


Film copyright lasts for 70 years from the death of the survivor of the principal director, the author of the screenplay, the author of the dialogue or the composer of music specially created for and used in the film (section 13B). Again, this is subject to the condition that one of the authors of the film is an EEA national or the country of origin of the film is an EEA member state. If this is not the case, the film is accorded the same term of copyright as in its country of origin.

Sound recordings copyright expires at the end of 50 years from the end of the calendar year in which the recording was made or if during that period it is published, 50 years from publication, or if during that period the recording is not published but is made available to the public by being played in public or communicated to the public, 50 years from being made available (section 13A). Again, the author of the sound recording must an EEA national. If that is not the case, the duration of protection is to be that accorded in the author’s own country.

Under section 14, broadcast copyright is to last 50 years from broadcast, provided the author is an EEA national. If this is not the case then the length of protection is that provided in the author’s own country. Copyright in repeats expires at the same time as copyright in the original broadcast. Under section 15 (which was not affected by the Copyright Term Directive), the copyright in a printed edition expires 25 years from first publication.

As explained in Chapter 6, the rules on the duration of copyright in works created before 1 August 1989 are complex. They are of concern to practitioners, but for the purposes of the examination you should assume that all the relevant events occurred after the operative date of the CDPA.


u list all the matters which have to be established in order for United Kingdom copyright to subsist.

Sample examination questionWhat tests do the courts employ in order to determine the originality of literary, dramatic, musical and artistic works?


u explain how originality is a requirement for copyright protection by virtue of the wording of section 1(1) of the CDPA

u accurately summarise the explanation in the University of London case that originality is concerned with source not inventiveness

u explain that original means ‘not copied’, although an alternative explanation is to state that the author must have expended a minimum amount of skill, labour and judgment

u critically explore some of the difficulties caused by this minimalist approach, especially with regard to revisions, adaptation, compilations and ‘reporter’s copyright’.


Reflect and review








Need to study again

I can summarise the principal categories of copyright works.

¢ ¢ ¢

I can explain the criterion of originality in copyright law and the need for permanent form.

¢ ¢ ¢

I can explain the rules which determine when a work qualifies for protection in United Kingdom law.

¢

¢

¢

I can explain and apply the concepts of authorship and ownership.

¢ ¢ ¢

I can list all the matters which have to be established in order for United Kingdom copyright to subsist.

¢

¢

¢


Must revise

Revision done

7.1 Categories of copyright work ¢ ¢

7.2 The requirement of originality ¢ ¢

7.3 The requirement of permanent form ¢ ¢

7.4 Qualification for protection ¢ ¢

7.5 Authorship and ownership ¢ ¢

7.6 Duration ¢ ¢


Notes

Contents

Introduction 100

8 1 Thenatureofcopyrightinfringement 101

8 2 Primaryinfringement 104

8 3 Secondaryinfringement 107

8 4 Defencestocopyrightinfringement 108

8 5 Infringementofmoralrights 113


8 Copyright infringement and defences; infringement of moral rights


Introduction

This chapter will set out the rights of the copyright owner to prevent others from committing what are called ‘restricted acts’, that is, conduct which amounts to copyright infringement. Copyright infringement is subdivided into primary infringement (liability for committing one of the five restricted acts) and secondary infringement. This latter category imposes liability on retailers and others who deal commercially in infringing copies. As an introduction to primary and secondary infringement, we shall first examine the nature of copyright infringement.

The chapter will also deal with defences to copyright infringement. These are to be found primarily (and in great detail) in the Copyright, Designs and Patents Act 1988 (CDPA). We shall concentrate on those which are of general application. Other defences which exist independently of legislation will also be considered. Last, we shall look at how the moral rights of an author may be infringed when copies of a work are dealt with commercially.

As with the material covered in Chapter 7, copyright infringement is a topic where the basic principles are straightforward but where it is easy to get lost in the mass of detail found in the CDPA. You should therefore concentrate on understanding the nature of copyright infringement and the five restricted acts of primary infringement.


u understand the nature of copyright infringement

u explain and apply the statutory provisions relating to primary and secondary infringement of copyright

u explain and apply the principal statutory and non-statutory defences to an action for copyright infringement

u understand how infringement of moral rights dovetails with infringement of copyright

u list the various ways in which a copyright work may be infringed.

Intellectual property 8 Copyright infringement and defences; infringement of moral rights page 101

8.1 The nature of copyright infringement

Essential reading ¢ Bainbridge, Chapter 6: ‘Rights, Infringement and Remedies’ pp.145−65.

¢ Bently and Sherman, Chapter 8: ‘Infringement’ pp.170−95; Chapter 6: ‘Nature of the Rights’ pp.135−37, 153−59.

¢ Cornish, Chapter 12: ‘Infringement of Copyright and Moral Rights’ paras 12-03 to 12−20.

¢ Norman, Chapter 9: ‘Infringement of Copyright’ sections 9.1 and 9.2.

¢ Spence, M. and T. Endicott ‘Vagueness in the Scope of Copyright’ (2005) 121 LQR 657.

¢ Cases: Francis Day & Hunter v Bron [1963] Ch 587; Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273; Hawkes & Son v Paramount Film Services [1934] Ch 593; ZYX Music v King [1995] 3 All ER 1; Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416; Baigent & Lee v Random House Group Ltd [2007] FSR 579.

¢ Copyright, Designs and Patents Act 1988 sections 2 and 16.

The basic principles of copyright infringement are set out in sections 2 and 16 of the CDPA. Please read these two sections carefully now. Observe how section 16(1) lists the restricted acts. Each one of these is a category of primary infringement and each receives separate, more detailed treatment in the five subsequent sections of the CDPA. Remember when you read section 16(1)(d) that it was amended by the Copyright and Related Rights Regulations 2003 (which implemented the EU’s Information Society Directive) so as to enable the copyright owner to control not just the broadcast of the work but its communication to the public, thereby stating explicitly that dissemination of a work on the internet is a restricted act. Note further how subsections (2) and (3) of section 16 provide further information about the nature of copyright infringement. The principal acts of secondary infringement are found in sections 22 to 27. We shall deal with these later.

The essence of copyright infringement is that it involves taking a work (as defined in section 1 of the CDPA) belonging to another. Copyright law does not impose any restriction on the use of an article which contains a copyright work. A purchaser of a book may read it, use it to prop up a table leg, tear it up or burn it, in fact do anything with it as long as a restricted act is not committed.

Copyright infringement, as a statutory tort, is an interference with property rights. Liability for any of the restricted acts is strict. In relation to primary infringement, the claimant does not need to prove that the defendant knew that an act of infringement was being committed. However, where the defendant can show innocence (defined objectively), section 97 of the CDPA provides that damages may not be awarded against them.

In contrast to other forms of intellectual property rights, copyright infringement does not have to be committed in the course of trade, nor need the defendant have profited from the infringing conduct. Private and domestic use is not a general defence.

However, copyright infringement does require the defendant to have taken something of the claimant’s work. The claimant must therefore show a causal link between the source work and the alleged infringement. The link may be a direct one or it can be indirect (see the wording of section 16(3) of the CDPA). There may therefore be some other explanation as to why the defendant’s work resembles the claimant’s, such as coincidence, or that the claimant copied the defendant’s work, or that both works were derived from a common source, which may or may not be in itself a copyright work (see as examples of this last mentioned point Roberton v Lewis (1960) [1976] RPC 169 and Warwick Films v Eisinger [1969] 1 Ch 508). The fundamental principle is that independent creation is always an effective rejoinder to an allegation of copyright


infringement: Kleeneze Ltd v DRG Ltd [1984] FSR 399. This is another feature which distinguishes copyright from other forms of intellectual property right and which therefore points to copyright being a limited rather than absolute monopoly.

A point which was made in Chapter 7 is that someone who takes the whole or part of an existing copyright work and then adds something of their own to it will be both an infringer and the author of the copyright in the additional material. If you are unclear on this point, then you should reread ZYX Music v King [1995] 3 All ER 1 now.

SummaryCopyright as a statutory tort imposes strict liability for the acts of primary infringement listed in section 16(1) of the CDPA. Each of these involves the defendant taking the claimant’s work. Such taking does not have to be for profit so that copyright infringement can be committed in the home. Copyright does not impose any restrictions on the use of a copyright article. Independent creation is always a defence to copyright infringement.

8.1.1 The requirements of objective similarity and derivationIn Francis Day & Hunter v Bron [1963] Ch 587, Diplock LJ stated the basic principle governing copyright infringement. The claimant must show two things, namely objective similarity and derivation.

Objective similarity requires the court to compare the source work with the alleged infringement. This comparison is in order to establish whether there has been a likelihood of copying and is made on an overall basis. For example, when dealing with an alleged infringement of copyright in a popular song, the court will consider the impression on the listener of the first eight bars, as those are the most important: Francis Day & Hunter v Bron. In the case of a play allegedly copied from a novel, the overall plot and characters are compared: Corelli v Gray (1913) 30 TLR 116.

Derivation is another way of saying that the defendant must have taken the claimant’s work, either directly or indirectly. Examples of derivation include Solar Thomson v Barton [1977] RPC 537 (where the defendant’s agent gave instructions to make replacement parts for conveyor belts which infringed the claimant’s copyright in engineering drawings for that equipment) and LB (Plastics) v Swish Products [1979] RPC 551 (where the defendant copied the interior of the claimant’s self-assembly furniture thereby infringing the drawings for the furniture). (Note that on their facts both of these cases today would involve design right rather than copyright; however, the principle which they illustrate is still valid.) Examples of what is not derivation include Purefoy Engineering v Sykes Boxall (1955) 72 RPC 89 (each party had prepared their own catalogue showing their respective ranges of machine tools, thus the defendant’s catalogue, though similar, was not a copy of the claimant’s) and Warwick Films v Eisinger [1969] 1 Ch 508 (the defendant’s film about the trials of Oscar Wilde was based not on the claimant’s book but on the actual court transcript).

8.1.2 The requirement of substantial takingLook again at section 16(3) of the CDPA and note how it states that the defendant may take the whole of the claimant’s work or a substantial part of it. ‘Substantial’ is determined not by reference to how much of the work has been taken, but by whether the essence of the work is reproduced. It involves quality not quantity. Examples of substantial taking are Hawkes & Son v Paramount Film Services [1934] Ch 593 (a 30 second extract of the famous ‘Colonel Bogey’ march being included in a news film) and Spelling Goldberg v BPC Publications Ltd [1981] RPC 280 (one frame from a television programme being used to make a ‘Starsky & Hutch’ poster).

When you read the cases on substantial taking you should reflect on how far they can be reconciled with the idea/expression dichotomy discussed in Chapter 6. Has the defendant taken the underlying idea or the work itself? Examples of where the idea − but not its expression − was taken is Norowzian v Arks Ltd [1999] FSR 79 (Rattee J) and [2000] FSR 363 (CA) and Green v Broadcasting Corp of New Zealand [1989] 2 All ER 1056.


A difficult case to reconcile with these two is Elanco v Mandops [1980] RPC 213. You should be familiar with these three cases from the work undertaken for Chapter 6: if you are unsure about them, you should return to your notes on that chapter.

The decision in Baigent & Lee v Random House Group Ltd [2007] FSR 579 provides another useful illustration of the requirement that the defendant must take the expression of the work, not its underlying idea, in order to be liable for copyright infringement. The following test is suggested by Mummery LJ.

u What are the similarities between the alleged infringement and the original copyright work?

u What access, direct or indirect, did the author of the alleged infringing work have to the source work?

u Did the author of the alleged infringement make some use of material derived by him, directly or indirectly, from the original work?

u If the defendant contends that no such use is made, what is his explanation for the existence of similarities between the two works?

u If use was made of the source work, did this amount to a ‘substantial part’ of it?

u What factors support the conclusion that what has been taken is a ‘substantial part’ of the original?

A key point, however, is that copyright is essentially concerned with derivation rather than with overall similarity (which is a test more appropriate to passing off): Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416 (HL) at paras 39 to 41 per Lord Millett.

8.1.3 Liability for infringement by othersCopyright infringement, as a statutory tort, attracts the normal rules on vicarious liability, so that an employer will be held responsible for acts of infringement committed by employees: PRS v Mitchell & Booker [1924] 1 KB 762. However, there is another form of liability for the conduct of others unique to copyright law. This is because of the presence of the word ‘authorise’ in section 16(3) of the CDPA. In Moorhouse v University of New South Wales [1976] RPC 151, the University was held to have authorised infringement by providing the materials to be copied as well as the necessary equipment to do so. It was held that ‘authorise’ meant not only to ‘sanction, countenance and approve’ but also to commit ‘acts of such indifference from which authorisation may be inferred’.

The combination of facts in the Moorhouse case was important. It involved the supply of copyright material (in a library) and the provision of the means of copying (a photocopying machine). Slightly different facts may mean that there is no authorisation. In CBS v Ames [1981] 2 All ER 812, the hiring of sound recordings (copyright material) by a record shop together with the sale of blank tapes was not enough, as the defendant did not provide recording equipment. In Amstrad v BPI [1986] FSR 159, the supply of a double-headed cassette deck was not enough (absent the provision of copyright materials) to ‘authorise’ purchasers to use it to make illegal copies, although the court added that this might amount to ‘inciting’ the commission of a crime under what is now CDPA section 107. However, this potential criminal liability did not entitle the record companies to obtain an injunction restraining the sale of the equipment: CBS v Amstrad [1988] AC 1013.

You should consider the implications of ABKCO Music v Music Collection International [1995] RPC 657 for copyright infringement committed over the internet. It was held that there can be liability under section 16 for authorisation committed outside the United Kingdom as long as the restricted act itself was done within the jurisdiction.


Activities 8.1–8.28.1 Go over your notes on the above material. Then write a concise summary:

u derivation

u substantial taking

u authorisation.


8.2 Read the speech of Lord Millett in Designers Guild Ltd v Russell Williams (Textiles) Ltd. Then summarise his statement of principle about the way the court should approach the issues of objective similarity and derivation.


u understand the nature of copyright infringement.

8.2 Primary infringement


¢ Bently and Sherman, Chapter 6: ‘Nature of the Rights’ pp.138−53.

¢ Cornish, Chapter 12: ‘Infringement of Copyright and Moral Rights’ paras 12-21 to 12-35.

¢ Norman, Chapter 9: ‘Infringement of Copyright’ section 9.3.

¢ Cases: Nelson v Rye & Cocteau Records [1996] 2 All ER 186 at 208; PRS v Harlequin Record Shops [1979] 2 All ER 828.

¢ Copyright, Designs and Patents Act 1988 sections 17–21.

Useful further reading ¢ Sterling, J.A.L. ‘Copyright, Designs and Patents Act 1988: the New Issuing Right’

[1989] EIPR 283.

¢ Phillips, J. and L. Bently ‘Copyright Issues: The Mysteries of Section 18’ [1999] EIPR 133.

¢ Spence, M. ‘Intellectual Property and the Problem of Parody’ (1998) 114 LQR 594.

¢ Rütz, C. ‘Parody: A Missed Opportunity’ [2004] IPQ 284.

The five acts of primary infringement are set out in sections 17–21 of the CDPA. We shall examine each in turn.

8.2.1 CopyingSection 17 of the CDPA contains the relevant provisions relating to ‘copying the work’. Read the section carefully now and note the definitions of copying given for each category of copyright work. Copying may involve an exact reproduction or taking only part of the work or creating a work which appears to be similar. The simpler the source work, the greater degree of copying required for there to be infringement: see Kenrick v Lawrence (1890) 25 QBD 99 (the drawing of a hand pointing to a polling station was so simple that only a total copy would infringe) and Guild v Eskandar Ltd. [2003] FSR 23, CA (designs for ‘very simple’ knitwear not infringed by the defendant’s similar designs).

A particular problem which may be encountered is where the defendant creates a parody of the source work (that is, using the work for humorous purposes or to make a satirical comment). Although other jurisdictions have a special parody defence (as an aspect of


freedom of speech), under United Kingdom law parodies are treated in exactly the same way as other forms of copying. The only issue is whether the defendant took a substantial part of the source work. In Joy Music v Sunday Pictorial [1960] 2 QB 60 there was no infringement where new words (commenting on the conduct of a member of the Royal Family) were published in the defendant’s newspaper. Although the paper suggested the words could be sung to the tune of the claimant’s song, the musical work had not been reproduced, and the words had been independently created. Contrast both Schweppes v Wellingtons [1984] FSR 210 (minor changes to the label of a bottle imitating that used by the claimant for their tonic water) and Williamson v Pearson [1987] FSR 97 (minor alterations to the words of the claimant’s song which was then used in an advertisement).

When you study the material on section 17, you should remember the work you did earlier on the dividing line between copying the idea and copying the expression. Then consider whether the decision in Elanco v Mandops [1980] RPC 213 can be reconciled with Geographia v Penguin [1985] FSR 208 (no infringement where what was taken was the colouring of maps in an atlas) and Johnstone Safety Co v Peter Cook International PLC [1990] FSR 161 (where the octagonal base of a traffic cone was held to be an idea not its expression).

Remember too that for liability under section 17, the defendant does not have to have seen the original work, as copying can be indirect. So in Bernstein v Sydney Murray [1981] RPC 303, the defendant infringed the copyright in a fashion sketch by copying a garment based on the sketch, and in Plix Products v Winstone [1986] FSR 608 (NZCA) there was infringement when the defendant orally gave instructions to a third party to make a tray for carrying kiwi fruit, in the process describing the claimant’s tray which was in front of him when he made the telephone call. Another illustration is Gabrin v Universal Music Operations Ltd [2004] ECDR 18 where basing a CD cover on a 20-year-old poster infringed the copyright in the photograph from which the poster had been derived. The same point can be found in cases already discussed in relation to the meaning of derivation (see Solar Thomson v Barton and LB (Plastics) v Swish Products above). Last, it is not necessary for the defendant to realise that there was copying, as the court can find that copying was subconscious because the claimant’s work had been seen or heard by the defendant. This is a particular feature of cases involving music copyright where the defendant will find it hard to deny that they heard a particular popular song on the radio or television (see EMI Music Publishing v Papathanasiou [1993] EMLR 306).

8.2.2 Issuing copies to the publicSection 18 gives the copyright owner the right to control the issuing of copies of the work (the so-called ‘distribution right’). The section has been amended twice to take account of EU directives and in its present form is not easy to comprehend. Nevertheless you should read it now. The following comments can be made:

u Section 18 changes the nature of the restricted act. Under the Copyright Act 1956 there was liability for ‘publishing the work’ (a one-off occurrence – a work was either published or it was not, as explained in Infabrics v Jaytex Ltd [1981] 1 All ER 1057). Now the copyright owner can control the first issuing of each and every copy of the work: Nelson v Rye & Cocteau Records [1996] 2 All ER 186 at 208.

u As amended, the section incorporates the doctrine of intra-EU exhaustion of rights, so that the copyright owner cannot object to the issuing of copies which have previously been put in circulation within the EEA, but can object to the issuing of copies which have previously been put in circulation outside the EEA: Microsoft Corporation v Computer Future Distribution Ltd [1998] ETMR 597 (see Chapter 13 for further details on intra-EU exhaustion of rights). However, the separate rental right found in section 18A of the CDPA is a deliberate exception to the doctrine of exhaustion: Case C-61/97 Egmont Films v Laserdisken [1998] ECR I-5171 (ECJ).

u It is still a matter of conjecture as to the exact meaning of ‘issue to the public’. Consider as an example the normal chain of distribution of a book (from publisher to wholesaler to retailer to the purchasing public). Is issuing concerned with


the disposition of the copies (i.e. once copies of a book have been supplied to a wholesaler the right is exhausted) or is issuing concerned with the destination of the copies (i.e. the right is only exhausted once copies are purchased by the public)? The matter is discussed in the Phillips and Bently article listed above, and further guidance by analogy may be found in Case C-16/03 Peak Holding AB v Axolin-Elinor AB [2004] ECR I-11313, a case concerned with exhaustion of trade mark rights. The ECJ ruled that where goods have been put on display in a shop without being purchased by the public then they had not been ‘put on the market’ for the purposes of Article 7 of the Trade Marks Directive. This suggests that section 18 of the CDPA is concerned with the destination of the goods, so that goods have not been issued to the public until the copies have been bought from a retailer.

u Despite its obscure wording, it is apparent that section 18 changes the relationship between primary and secondary infringement. A retailer can now be liable for primary infringement, whereas previously they could only be liable for secondary infringement (Infabrics v Jaytex Ltd). This point appears to have been overlooked by the legislature, as there is a conflict between section 18 and the definition of infringing copy for the purposes of secondary liability in section 27 (see below).

8.2.3 Performing in publicThe copyright owner’s right to control the public performance of any work other than an artistic work or typeface is set out in section 19. Read the section now and observe how it defines performance, but not ‘in public’. The current law of what amounts to a public performance is summarised in PRS v Harlequin Record Shops [1979] 2 All ER 828. You should read this decision now. It confirmed a line of earlier cases which treated women’s institutes, private clubs, factories and shops as all being ‘in public’, the key factor being the relationship between the visitor to such premises and the copyright owner. In consequence, ‘in public’ means anything outside the domestic sphere.

The performance right in copyright works (particularly musical works and sound recordings) is usually assigned or licensed by the copyright owner to a copyright collecting society (sometimes called a copyright management society) who will issue licences to those who control premises, permitting the public performance of the work on those premises. A prime example in the United Kingdom is the Performing Right Society (PRS) (it has sister organisations in many other countries). In the case of copyright music which is performed in public (whether live or via a recording), PRS grants either a blanket licence to the controller of premises (there are over 40 different tariffs for such licences depending on the nature of the premises, ranging from aircraft to hairdressers to concert halls to discos) or a licence which requires a detailed record to be kept of all music which has been performed (as is the case for radio and television broadcasts – even a brief extract of copyright music used in an advertisement requires a royalty to be paid). The licensing system is enforced by a team of inspectors who visit premises to check that a licence has been obtained. The resulting royalties are divided between the members of the Society (in the case of PRS, the members are primarily composers).

8.2.4 Communication to the publicSection 20 was amended by the Copyright and Related Rights Regulations 2003 so as to enable the copyright owner to control the broadcasting of any work (except a typographical arrangement) and its dissemination via the internet. The new wording of section 20 achieves the same result as Shetland Times v Jonathan Wills [1997] FSR 604, which held that inclusion of extracts from the claimant’s newspaper on a website amounted to broadcasting the work. Remember that section 20 only covers broadcasting and dissemination via the internet, so ‘communication’ has a much narrower meaning than in everyday speech. While section 18 is concerned with tangible copies of a work, section 20 applies only to intangible copies. Section 20 has been held to be available to a copyright owner who wishes to object to peer-to-peer file sharing activities: Polydor v Brown [2005] EWHC 3191 (Ch).


8.2.5 AdaptationAs provided for by section 21, the copyright owner can control how a literary, dramatic or musical work (but no other type of work) is adapted. Read section 21 carefully now. Note from section 21(3) what amounts to adaptation. Consider also the effect of section 21(2) with regard to the defendant’s subsequent conduct in relation to the adapted work.

SummaryThe primary acts of copyright infringement found in the CDPA are copying (section 17), issuing copies to the public (section 18), performing the work in public (section 19), communicating the work to the public (section 20) and adapting the work (section 21). Copying the work means reproducing it in any material form. Issuing copies is the act of putting copies of the work into circulation for the first time, though it remains to be resolved at what stage in the chain of distribution this occurs. The public performance right is an area of law where the interests of the copyright owner are looked after by copyright management societies such as the Performing Right Society. Communication to the public comprises both broadcasting the work and electronic transmission by the internet. Adaptation includes translating, converting and arranging the work. Further liability is imposed for subsequently copying, issuing, performing and communicating the adaptation.

8.3 Secondary infringement


¢ Bently and Sherman, Chapter 8: ‘Infringement’ pp.195−98.


¢ Norman, Chapter 9: ‘Infringement of Copyright’ section 9.4.

¢ Cases: Pensher Security Door Co Ltd v Sunderland City Council [2000] RPC 249; CBS Ltd v Charmdale [1980] 2 All ER 807.

¢ Copyright, Designs and Patents Act sections 22–27.

The principal forms of secondary infringement are set out in sections 22 and 23 of the CDPA. Read these two sections carefully now. They are aimed at those who deal commercially with infringing copies of copyright works. Liability is not confined to retailers. In Pensher Security Door Co Ltd v Sunderland City Council [2000] RPC 249 (CA), a local authority which had installed security doors in a block of flats was found liable under section 23(a) as the doors infringed the claimant’s design.

The wording of sections 22 and 23 require proof of two additional elements besides the commission of conduct listed in the two provisions. First, the claimant must show that the defendant had knowledge. This stems from wording appearing in both sections, ‘which he knows or has reason to believe’. It imposes an objective test, so that the defendant is to be judged by the standard of those in that particular trade: LA Gear Inc v Hi-Tec Sports PLC [1992] FSR 121. The copyright owner can always give a notice by writing to the defendant, in which case the court will assume that the defendant has knowledge within three weeks from the date of the letter: Monsoon Ltd v India Imports of Rhode Island [1993] FSR 486.

The other requirement in sections 22 and 23 is that the defendant must be dealing in infringing copies. The definition of ‘infringing copy’ is to be found in section 27. This is not an easy section to understand. It is derived in part from its predecessor in the Copyright Act 1956 and arguably is in conflict with section 18 (which, as noted above, is derived from EU directives and creates intra-EU exhaustion of rights). It is best to break down section 27 into a series of discrete steps.


u Section 27(2) provides that an article is an infringing copy if its making constituted an infringement. This is straightforward and contemplates that the making of the copy was done without the consent of the copyright owner. The provision therefore applies to all counterfeit products wherever made.

u Section 27(3) provides that an article is also an infringing copy if it has been or is proposed to be imported into the United Kingdom and its making in the United Kingdom would have constituted an infringement of the copyright or a breach of an exclusive licence. The subsection only applies where goods have been imported into the United Kingdom. Under the first of its alternatives, it requires the court to assume that the goods were made in the United Kingdom rather than in their actual place of manufacture. According to Browne Wilkinson J in CBS Ltd v Charmdale [1980] 2 All ER 807 (decided under the Copyright Act 1956), the court should assume that the making in the United Kingdom was by the actual manufacturer of the goods. Where, as in CBS, the goods were made by the copyright owner in another country, this gives rise to international exhaustion of rights. Under the second alternative, where the copyright owner has appointed an exclusive licensee, then even if the goods are parallel imports, the act of importation converts them into infringing copies for the purposes of sections 22 and 23.

u Section 27(5) declares that nothing shall be construed as applying to an article which may lawfully be imported into the United Kingdom by virtue of any enforceable EU right under s.2(1) of the European Communities Act 1972. This is an enactment of the doctrine of exhaustion of rights created by the ECJ under Articles 34 and 36 of the Treaty on the Functioning of the European Union (TFEU) (formerly Articles 28 and 30 EC) (exhaustion of rights is dealt with in more detail in Chapter 13).

SummaryThe acts of secondary infringement are set out in sections 22 to 27 of the CDPA. The principal forms of liability in sections 22 and 23 are targeted at, but not confined to, retailers. Secondary infringement requires the defendant to have knowledge and to be dealing in infringing copies. As a result of the wording of section 27, counterfeit goods will always be treated as infringing copies (section 27(2)). Parallel imports from within the EEA can not be infringing copies (section 27(5)). Parallel imports from outside the EEA may or may not be infringing copies depending on whether the copyright owner has appointed an exclusive licensee.


u explain and apply the statutory provisions relating to primary and secondary infringement of copyright.

8.4 Defences to copyright infringement

Essential reading ¢ Bainbridge, Chapter 7: ‘Defences to Copyright Infringement’ pp.202−21, 230−31.

¢ Bently and Sherman, Chapter 9: ‘Defences’ pp.199−221, 235−38.


¢ Norman, Chapter 9: ‘Infringement of Copyright’, section 9.5.

¢ Cases: Pro-Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605; IPC Media Ltd v News Group Newspapers Ltd [2005] FSR 752; Fraser-Woodward Ltd v British Broadcasting Corporation & Brighter Pictures Ltd [2005] FSR 762; Football Association Premier League v Panini (UK) Ltd [2003] FSR 698; Beloff v Pressdram [1973] RPC 765; Lion Laboratories v Evans [1984] 2 All ER 417; Hyde Park Residence Ltd v Yelland and Others [2000] 3 WLR 215; Ashdown v Telegraph Group Ltd [2001] 4 All ER 666; HRH Prince of Wales v Associated Newspapers Ltd [2007] 3 WLR 222.


Useful further reading ¢ Griffiths, J. ‘Preserving Judicial Freedom of Movement – Interpreting Fair Dealing

in Copyright Law’ [2000] IPQ 164.

¢ Griffiths, J. ‘Copyright Law after Ashdown – Time to Deal Fairly with the Public’ [2002] IPQ 240.

¢ Burrell, R. ‘Reining in Copyright Law: Is Fair Use the Answer?’ [2001] IPQ 361.

Those who are sued for copyright infringement can adopt a number of tactics.

u They can deny that what has been taken is a copyright work. This might involve arguing that what has been taken is an idea rather than expression (Baigent & Lee v Random House) or that what has been taken is not protected because it does not meet one or more of the requirements for copyright protection (see Chapter 7).

u They can allege that the claimant is not the copyright owner and so not entitled to bring the action (see as an example Beloff v Pressdram Ltd [1973] RPC 765 where the employer not the employee should have sued for infringement).

u They can deny that the basic elements of copyright infringement have been established. In other words, they can argue that there has been no taking of the claimant’s work (for example, because of independent creation) or that what has been taken is not substantial.

u They can deny that any act of primary or secondary infringement has been committed.

u They can argue that they had a licence (that is, the copyright owner’s consent) to do one or more of the restricted acts.

u They can plead one or more of the numerous statutory defences in the CDPA.

u They can plead one or more of the non-statutory defences.

We shall concentrate on these last two tactics, but when dealing with copyright infringement questions in the examination you should always consider whether the facts give rise to one or more of the other arguments.

Statutory defences found in Part I Chapter III of the CDPA are numerous (there are well over 50) and detailed. You are not expected to be familiar with all of them, as many apply to very specific circumstances. We shall consider only those which are of general application.

8.4.1 The general defence of fair dealingIn contrast to US copyright law (which has a general, flexible defence of ‘fair use’) United Kingdom defences relating to fair dealing with a copyright work are precise and detailed. They are set out in sections 28A, 29, 30 and 31. Read these four sections carefully now (you may ignore sections 31A to F which deal with visually impaired persons). Note the following about these four key sections.

u They all depend on the factual context in which the infringing behaviour was committed.

u Some apply to all categories of work, while some apply only to certain categories.

u Some contain the requirement of due acknowledgement.

u Most of these defences have been rewritten by the Copyright and Related Rights Regulations 2003, passed in order to implement Articles 5 and 6 of the EU Information Society Directive. In turn, the Directive, in Article 5(5), implemented the so-called ‘three-step test’ found in Article 10 of the WIPO Copyright Treaty 1996, namely that any limitations or exceptions to the rights of authors should be confined to certain special cases that do not conflict with a normal exploitation of the work and that do not unreasonably prejudice the legitimate interests of the author. The United Kingdom government did not include the test expressly in the Regulations.


The six fair dealing defences found in these four sections are as follows.

Making temporary copiesSection 28A was inserted by the Copyright and Related Rights Regulations 2003. It does not apply to computer programs, databases or broadcasts. The temporary copy must be an ‘integral and essential part’ of a technological process concerned with the internet, such as caching, and must have no independent economic significance.

Non-commercial researchSection 29(1) was amended by the Copyright and Related Rights Regulations 2003. It is confined to literary, dramatic, musical or artistic works and requires a sufficient acknowledgement, unless this is not practical. ‘Commercial research’ is not defined.

Private studySection 29(1C) was inserted as a replacement for the previous version of this defence by the Copyright and Related Rights Regulations 2003. Again, it only applies to literary, dramatic, musical or artistic works. Section 29(3) stipulates that copying must be done by the researcher or student themselves and does not extend to the making of more than one copy. ‘Private study’ is further explained by the 2003 Regulations as not including any study which is directly or indirectly for a commercial purpose.

Criticism or reviewSection 30(1) was amended by the Copyright and Related Rights Regulations 2003. It covers all types of copyright work, but requires the use of a sufficient acknowledgement and that the work has been made available to the public. ‘Made available’ for the purposes of fair dealing is defined in section 30(1A).

Reporting current eventsUnder section 30(2), fair dealing with any work (other than a photograph) is permitted for the purposes of reporting current events provided that it is accompanied by a sufficient acknowledgement, but no acknowledgement is required in connection with the reporting of current events by means of a sound recording, film or broadcast where this would be impossible for reasons of practicality or otherwise.

Incidental inclusionSection 31(1) provides that copyright in any work is not infringed by its incidental inclusion in an artistic work, sound recording, film or broadcast. Note that the section limits those works in which the source work may be included. The meaning of ‘incidental inclusion’ was considered in Football Association Premier League v Panini (UK) Ltd [2003] FSR 698 (subsequently confirmed by the Court of Appeal). The outcome of the case can be contrasted with that in Trebor Bassett Ltd v The Football Association [1997] FSR 211, where similar facts were unsuccessfully alleged to have given rise to trade mark infringement (see the requirement of ‘use in relation to goods’ in Chapter 13).

Application of the fair dealing defences

The onus is on the defendant to establish two things: that the circumstances of the defence are established and that the dealing was fair.

Whether the relevant circumstances (that is, review, reporting current events, etc.) covered by sections 28–31 have been met is an objective test, to be determined by the court not the parties: Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605. The terms ‘criticism’, ‘news’ and ‘current events’ should be given a wide meaning: Pro Sieben and Hyde Park Residence Ltd v Yelland [2000] 3 WLR 215. In relation to ‘current events’ you should note the debate in the last-mentioned case as to the period during which an event might remain current. In HRH Prince of Wales v Associated Newspapers Ltd [2007] 3 WLR 222 it was held that the publication of the claimant’s private diaries written some 10 years previously was not covered by the ‘current events’ defence.

Read the definition in section 30(1A) now.


However, ‘criticism and review’ does not cover use of the claimant’s copyright material for the purposes of making a comparative advertisement so as to boost the defendant’s own sales: IPC Media Ltd v News Group Newspapers Ltd [2005] FSR 752. You should note that ‘criticism and review’ cover both criticism of the claimant’s work and of ‘another work’. It extends to underlying ideas and values such as the role of the media in promoting celebrity status: Fraser-Woodward Ltd v British Broadcasting Corporation & Brighter Pictures Ltd [2005] FSR 762. This last-mentioned case deals also with the defence of incidental inclusion and should be studied carefully.

However, it is not enough for the defendant to show that their conduct falls within the circumstances of the four sections. They must also show that their use of the copyright work was fair. What is ‘fair’ is a question of fact in each case. Matters to be taken into account include the amount of the original work that is taken, the purpose of the use, the necessity of such use, whether the original work has already been published and the motives of the copier: Pro-Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605. Pro-Sieben confirmed earlier cases decided under the Copyright Act 1956 concerned with fair dealing, in particular Hubbard v Vosper [1972] 2 QB 84 (which held that even though a small amount is taken by the defendant, this is not conclusive as to fairness), Sillitoe v McGraw Hill [1983] FSR 545 (the purpose of the taking must be considered) and Associated Newspapers v News Group Newspapers [1986] RPC 515 (the defendant’s motives must be taken into account).

Activities 8.3–8.48.3 Go over the material on the general defence of fair dealing. Then complete the

following chart by listing the categories of work which are covered by each defence and the conditions which the defendant must satisfy as part of that defence (for example, whether due acknowledgement is required).

Defence Categories of work covered Conditions to be satisfied

Making temporary copies

Non-commercial research

Private study

Criticism or review

Reporting current events

Incidental inclusion


8.4 Read the Court of Appeal decision in Pro Sieben Media AG v Carlton UK Television Ltd, then write a concise summary of the principles given in the case about the application of the fair dealing defences.

8.4.2 Other general statutory defencesThree other statutory defences of general application should be noted.

Use of notes of spoken words

This defence is to be found in section 58. Read the section now. You should consider how section 58 is linked to section 3 of the CDPA, and the latter’s treatment of spoken word copyright.

Activity 8.5Return to your notes from Chapter 7 on Walter v Lane [1900] AC 539 and Express Newspapers v News (UK) [1990] 3 All ER 376. Then consider how section 58 would protect a journalist who records an interview with a celebrity.



Time shift

There is the defence found in section 70 for someone making an audio or video recording of a broadcast. Originally introduced in 1988, the defence was amended by the Copyright and Related Rights Regulations 2003. Read the amended section 70 now. Note how the recording must be made on domestic premises (this is one instance of private and domestic use providing a defence to copyright infringement) and must be for the purpose of enabling the broadcast to be viewed or listened to at a more convenient time. Note also how the defence can be lost under section 70(2). For an unsuccessful attempt to rely on the original section 70 in a commercial context, see Sony Music Entertainment (UK) Ltd v Easyinternetcafe Ltd [2003] FSR 882.

Public interest

The defence of ‘in the public interest’ to a claim for copyright infringement is preserved in effect by the wording of section 171(3) (Ashdown v Telegraph Group Ltd [2001] 4 All ER 666). We discussed the defence in Chapter 5 (‘Breach of confidence’). If you are unsure about the application of the defence, you should reread your notes from Chapter 5 now. The effect of the defence is to justify the defendant’s actions in the light of information which ought to be made known in the interests of society. An example of the successful use of the defence is Lion Laboratories v Evans [1984] 2 All ER 417 (discussed in Chapter 5) and a contrasting decision is that in Hyde Park Residence Ltd v Yelland and Others [2000] 3 WLR 215. For an interesting combination of fair dealing, public interest and the Human Rights Act 1998, you should read Ashdown v Telegraph Group Ltd [2001] 4 All ER 666, discussed in the article by Griffiths listed above. The current trend in case law is that copyright tends to prevail over the public interest in disclosure: HRH Prince of Wales v Associated Newspapers Ltd.

8.4.3 Non-statutory defencesYou will come across a number of defences to copyright infringement which are based on case law rather than the wording of the CDPA.

Acquiescence

The equitable defence of acquiescence may be pleaded where the claimant has made a misrepresentation to the defendant, on which the defendant relies, to the effect that copyright will not be enforced: Film Investors Overseas Services SA v Home Video Channel Ltd Times, 2 December 1996. The element of misrepresentation is vital, so that mere delay in commencing proceedings does not suffice to trigger the defence: Farmer Build Ltd v Carier Bulk Handling Materials Ltd [1999] RPC 461 (CA). There is a further useful discussion by the House of Lords on the effect of acquiescence on a claim to be entitled to royalties as a joint author in Fisher v Brooker [2009] 1 WLR 1764. The importance of misrepresentation is stressed, thereby making acquiescence very like estoppel.

Equitable defences

As an aspect of the equitable ‘clean hands’ doctrine, the court may refuse to protect the claimant against the defendant’s infringing conduct. It is necessary to distinguish between where the claimant’s conduct is not deserving of protection from where the copyright work itself is disentitled to protection. It is the nature of the work which matters, not the claimant’s conduct: A.G. v Guardian Newspapers (No. 2) [1990] 1 AC 109; ZYX Music v King [1995] 3 All ER 1 [1997] 2 All ER 129. The court will not enforce copyright if the work is immoral, scandalous, contrary to family life, contrary to public health or safety or the administration of justice or where it incites others to commit such harm: Hyde Park Residence Ltd v Yelland and Others [2000] 3 WLR 215.

Implied licence

The defence of implied licence is often pleaded, but rarely succeeds. This is because the court will only imply permission to commit a restricted act in so far as this is necessary to make an existing agreement between the parties effective. In Banier v


News Group Newspapers [1997] FSR 812, where the defendant published a photograph taken by the claimant which had previously been published in another newspaper, no licence was implied as the parties were not in a contractual relationship. Similarly, the absence of an existing contract between the claimant and defendant was fatal to the defence in Gabrin v Universal Music Operations Ltd [2004] ECDR 18.

Exhaustion of rights

The doctrine of exhaustion of rights in respect of articles which comprise copyright works (such as books, videos, CDs and computer software) states that the copyright owner cannot object to the importation of copies which have previously been put in circulation within the EEA, but can object to the issuing of copies which have previously been put in circulation outside the EEA: Microsoft Corporation v Computer Future Distribution Ltd [1998] ETMR 597 (see Chapter 13 for further details on intra-EU exhaustion of rights). The separate rental right found in section 18A of the CDPA is a deliberate exception to the doctrine of exhaustion: Case C-61/97 Egmont Films v Laserdisken [1998] ECR I-5171 (ECJ). In Case C-479/04 Laserdisken ApS v Kulturministeriet [2006] ECR I-8086, the ECJ confirmed that the wording of the Information Society Directive prevents EU Member States from having any doctrine of international exhaustion of rights with regard to the distribution of copyright works first put into circulation outside the EEA.


u explain and apply the principal statutory and non-statutory defences to an action for copyright infringement.

8.5 Infringement of moral rights

Essential reading ¢ Bainbridge, Chapter 5: ‘Author’s Rights’ pp.120−44.

¢ Bently and Sherman, Chapter 10: ‘Moral Rights’ pp.240−60.

¢ Cornish, Chapter 12: ‘Infringement of Copyright and Moral Rights’ paras 12-63 to 12-89.

¢ Norman, Chapter 10: ‘Moral Rights and Performers’ Rights’ sections 10.1 and 10.2.

¢ Cases: Clark v Associated Newspapers [1998] 1 All ER 959.

¢ Stamatoudi, I. ‘Moral Rights of Authors in England: The Missing Emphasis on the Role of Creators’ [1997] IPQ 478.

¢ Ginsberg, J. ‘Moral Rights in a Common Law System’ [1990] Ent LR 121.

The CDPA 1988, in Part I, Chapter IV, formally introduced the moral rights of the author into United Kingdom copyright law in fulfilment of obligations imposed by Article 6bis of the Berne Convention. Two of the moral rights (the right of paternity and right of integrity) derive from the Berne Convention and arise in respect of those categories of copyright work covered by that Convention (that is, literary, dramatic, musical and artistic works and films). The other two rights are not the result of the Berne Convention. One (the right to object to a false attribution of authorship) was present in the Copyright Act 1956. The other (the right of privacy in photographs and films) was inserted belatedly into the CDPA during its passage through Parliament as a result of changes to the ownership of photographic copyright.

When going through the material which follows on moral rights, particularly those which flow from the Berne Convention, you should consider critically whether the adoption of moral rights can be considered consistent with the United Kingdom’s entrepreneurial view of copyright. Further, when looking at the relevant provisions of the CDPA, you should reflect on whether those provisions are effective in implementing the objectives of the Berne Convention into United Kingdom law.


Infringement of any of the moral rights is actionable as a breach of statutory duty: section 103 of the CDPA. Such infringement is actionable by the author of the work, not any subsequent owner to whom the copyright might have been assigned: Confetti Records v Warner Music UK Ltd [2003] EMLR 790. You should therefore keep in mind the distinction between authorship and ownership, discussed in Chapter 7.

8.5.1 The right of paternityThe author of a literary, dramatic, musical or artistic work or film has the right to be identified as its author (section 77). Read the section now. Note when the right arises (section 77(2)–(6)) and what ‘identification’ means (section 77(7)–(8)). In order for the right to arise, it must be asserted. This is provided for by section 78. You should read this section now. Note when and how the right is to be asserted, and the effect of assertion on third parties. Section 79 provides for when the right does not arise. This may be because of the nature of the work (section 79(2)) or if the work is created in the course of employment if the employer consents to the relevant infringing act (section 79(3)). Lastly, note how the fair dealing defences apply to infringement of the right of paternity (section 79(4)–(6)).

8.5.2 The right of integrityThe author of a literary, dramatic, musical or artistic work or film has the right to object to its derogatory treatment (section 80). Read the section now. This moral right does not have to be asserted, but you should note the narrow definitions of both ‘treatment’ and ‘derogatory’ in s.80(2). The owner can only object to the distortion, modification or mutilation of the work if such treatment is prejudicial to the honour or reputation of the author: Confetti Records v Warner Music UK Ltd.

The right is infringed in the circumstances listed in section 80(3)–(4) and section 83. As with the right of paternity, there are numerous exceptions and qualifications to the right, found respectively in sections 81 and 82. Read these two sections now.

There is little United Kingdom case law so far on moral rights. The courts have adopted an objective approach to the question of what is derogatory (rather like the test for what is defamatory) so that the author’s feelings are not taken into account: Tidy v Trustees of the Natural History Museum [1996] EIPR D-81 and Pasterfield v Denham [1999] FSR 168.

8.5.3 Other moral rightsUnder section 84, a person can object to the false attribution of authorship of a literary, dramatic, musical or artistic work or the false attribution of being the director of a film. An example of section 84 in operation is Clark v Associated Newspapers [1998] 1 All ER 959, where the claimant successfully alleged that a satirical newspaper column entitled ‘Alan Clark’s Secret Election Diary’ would be assumed by readers to his work. The defendant’s indication that the column had been written by another was in typeface too small to be noticed by the average reader.

As mentioned above, section 85 was added to the CDPA in the latter stages of its progress through Parliament. It creates a right of privacy in photographs and films which have been commissioned for private and domestic purposes.

8.5.4 General provisionsThe duration of moral rights is catered for by section 86. With the exception of the right found in section 84, the duration of moral rights is coterminous with the duration of copyright. The right to object to false attribution lasts for the lifetime of the person wrongly attributed as author and for 20 years after their death. Moral rights remain personal to the author and cannot be assigned, but they pass on death or bankruptcy in accordance with the usual rules (sections 94 and 95). The author may however consent to conduct which would otherwise infringe and may also waive their rights (section 87).


Activity 8.6Go over the above material on moral rights, then write a concise summary of the provisions in the CDPA dealing with the following matters in respect of the right of paternity and the right of integrity:

u the statutory definition of the right

u the conditions, if any, to be satisfied before the right arises

u the circumstances in which the right can be infringed

u the circumstances in which the right does not apply or will be deemed not to have been infringed.



u understand how infringement of moral rights dovetails with infringement of copyright.

Sample examination questionsQuestion 1 ‘English law does not provide adequate protection for moral rights, in particular in relation to authors who do not own the copyright in works that they have created.’

Discuss.

Question 2 In the summer of 2004, Shelley, a famous poet, wrote a poem to English football entitled ‘We will win’, timed to coincide with the World Cup. He recited this poem at a formal dinner held for the England players, the team organisers and other special guests. David, one of the England players, responded with an impromptu speech thanking Shelley for his support. Unbeknown to Shelley or David, a reporter from The Daily Grime newspaper was present at the dinner. The reporter taped the evening’s events. The exact wording of David’s speech and Shelley’s poem were reported in The Daily Grime newspaper the next morning.

The following week, England played Guatemala in the World Cup and lost 4–0. Magnus, a columnist in The Daily Grime wrote a humorous poem entitled ‘We will lose’. Each verse reproduced a verse of Shelley’s poem, except that the word ‘lose’ was always substituted for the word ‘win’. The verses were interspersed with a chorus which reproduced one line from David’s impromptu speech.

Louise read the ‘We will lose’ version of the poem in The Daily Grime newspaper. Later the same day, she started to write the words to a new song. The song was called ‘The losers’ and it contained passages which were remarkably similar to the poem in The Daily Grime. When asked by her best friend, Susie, how she wrote the lyrics, Louise answered ‘the words just came to me’. Susie then added the music to Louise’s words.

Susie is a member of the pop group, the Cheaters. The Cheaters recorded and released ‘The losers’ earlier this year. The song was distributed by Swerve Records and became a commercial success.

Advise Shelley and David.

Advice on answering the questionsQuestion 1 A good answer will:

u explain how moral rights were introduced into the CDPA in order to meet the United Kingdom’s obligations under the latest version of the Berne Convention

u set out the rights found in Chapter IV Part I of the CDPA and explain how they can be infringed

u concentrate on the rights of paternity and integrity, commenting critically on the definition of each of these rights


u consider critically the conditions attached to the right of paternity, especially the need to assert the right on assignment of the copyright in the work, and consider whether in the light of potential inequality of bargaining power between publisher and author such a requirement is appropriate

u consider also in relation to the right of paternity whether the requirement of assertion is consistent with the civil law view of copyright as an aspect of the natural law rights of the author

u consider critically the exclusions and exceptions imposed on these two rights by the terms of the CDPA

u consider critically whether the limited case law available so far on the right of integrity protects the interests of the author

u conclude by discussing whether the United Kingdom copyright system, which treats copyright as an economic right, can readily adjust to civil law concepts of copyright as an aspect of the author’s personality.

It is expected that the good answer will make use of the arguments raised by the authors of various articles referred to in this subject guide and in the recommended textbooks.

Question 2 A good answer will:

a. Begin by considering what copyrights exist, and whether the conditions for copyright protection are met.

u Both Shelley and David are potentially the authors of literary works under section 3 of the CDPA.

u Are these original? Is David’s speech sufficient to attract copyright protection?

u Have they been recorded? Shelley’s poem presumably is already written down (the question says ‘he wrote’ and ‘he recited’), but David’s speech is ‘impromptu’. Have David’s words been recorded in accordance with section 3(2) of the CDPA? Consider the effect of the reporter’s tape recorder in the light of Walter v Lane and Express Newspapers v News (UK).

u Are the authors ‘qualifying persons’?

u Who would be the owner of each of the two works?

b. Consider next the various acts of infringement which may have been committed. Take the facts chronologically.

u The reporter at the dinner. He copies (section 17) Shelley’s poem by means of the tape recording but only ‘fixes’ David’s speech – can he simultaneously fix and infringe (see the Philips article discussed in relation to spoken word copyright in Chapter 7).

u Magnus copies Shelley’s poem (consider the parody cases, especially those where only minor changes were made to the source work) and David’s speech. Is there substantial taking? Would taking one line of a speech suffice? Has Magnus exercised enough skill, labour and judgment for him (or his employers) to acquire copyright in what he has written (consider ZYX Music v King).

u The Daily Grime will have issued copies of the works to the public.

u Louise has indirectly copied Shelley’s and David’s works by copying Magnus’s work (assuming the last-mentioned could claim copyright); subconscious copying suffices. It is important to understand the chain of copying here (from Shelley to Magnus to Louise): Solar Thompson v Barton is a useful illustration of how indirect copying can occur.

u Susie has added her own musical copyright and so does not infringe anything.


u The Cheaters and Swerve Records have copied by means of a sound recording (section 17) of a work (the words of the song) which is an indirect copy of the poem and the speech; copies of the sound recording have been issued to the public (section 18); there may also be public performance (section 19).

c. Consider lastly whether there are any defences available to any of the defendants. The most appropriate would be:

u for the newspaper, use of the recording of spoken words (section 58 – but consider whether the conditions are met)

u for the newspaper, reporting current events. Consider in detail whether Magnus and The Daily Grime could meet the exacting standards set out by the Court of Appeal in Pro Sieben.


Reflect and review








Need to study again

I can understand the nature of copyright infringement.

¢ ¢ ¢

I can explain and apply the statutory provisions relating to primary and secondary infringement of copyright.

¢ ¢ ¢

I can explain and apply the principal statutory and non-statutory defences to an action for copyright infringement.

¢

¢

¢

I can understand how infringement of moral rights dovetails with infringement of copyright.

¢ ¢ ¢

I can list the various ways in which a copyright work may be infringed.

¢ ¢ ¢


Must revise

Revision done

8.1 The nature of copyright infringement ¢ ¢

8.2 Primary infringement ¢ ¢

8.3 Secondary infringement ¢ ¢

8.4 Defences to copyright infringement ¢ ¢

8.5 Infringement of moral rights ¢ ¢

Contents

Introduction 120

9 1 Overviewofthevariousmeansofprotectingdesigns 121

9 2 Theregistrationsystem 122

9 3 Copyrightprotectionfordesigns 125

9 4 Statutoryprovisionscurtailingcopyright 126

9 5 Unregistereddesignright 129


9 Designs


Introduction

Design law exists to protect the appearance of articles rather than the articles themselves: it is concerned with how things look. The underlying idea behind the law of designs is that it involves two distinct elements: an article or product (which under the new law need not be mass-produced) and some added ingredient – a design feature which enhances the appearance of the article. It is this design feature which receives legal protection, not the product (unless, of course, the product qualifies in its own right for patent protection). Further, the law makes an unquestioning value judgment that articles which have a visual impact on the end user are more deserving of protection than functional items, by conferring, in the case of the former, a longer period of protection and by providing much narrower defences to an infringement action. In contrast to patents or copyright, there is little academic literature exploring the justifications for the design system and it is generally assumed that the theories as to why we have copyright (see Chapter 6) or patents (see Chapter 15) are equally applicable to designs.

The law on designs has been described as ‘multi-layered, complex, and lacking in logic’ (Bently and Sherman). A designer has a number of legal methods with which to protect his/her creative endeavours, three under United Kingdom law and two under EU law.

While you should be aware of the existence of these five cumulative systems, your syllabus requires you to concentrate on just two, namely United Kingdom copyright and United Kingdom unregistered design right. You should therefore treat the materials relating to United Kingdom registered design law and EU registered and unregistered design law as background information only.

This chapter will therefore provide an overview of the choices available to a designer, will explain the registration system in outline, but will then concentrate on the way in which copyright and unregistered design rights interact to provide protection for the appearance of articles.

Learning outcomesBy the end of this chapter and the relevant reading you should be able to:

u summarise the legal means available to protect designs

u explain when a design can be protected under the law of copyright

u explain the circumstances when copyright protection for designs is excluded

u explain and apply the criteria for the protection of unregistered design right under United Kingdom law

u list the key elements in the definition of an unregistered design right.

Intellecutual property 9 Design page 121

9.1 Overview of the various means of protecting designs

Essential reading ¢ Bainbridge, Chapter 16: ‘What is a Design?’ pp.545−59.

¢ Bently and Sherman, Part III: ‘The Legal Regulation of Design: Introduction’ pp.607−14.

¢ Cornish, Chapter 15: ‘Industrial Designs’ paras 15-01 to 15-09.

¢ Norman, Chapter 11: ‘Designs’ section 11.1.

Over the years, United Kingdom government policy has fluctuated between insisting that the designer can only obtain protection by registration and permitting the designer to choose between registration in accordance with the Registered Designs Act 1949 as amended (RDA) and copyright (or at least a copyright-type right). Immediately prior to the introduction of the Copyright, Designs and Patents Act 1988 (CDPA), designers could choose to register the appearance of their design at the Designs Registry (part of the United Kingdom Intellectual Property Office) (UKIPO) or, where the design started out as a drawing, they could rely on the copyright in that drawing to protect any direct or indirect three-dimensional copy of that drawing. As a result of the decision of the House of Lords in British Leyland v Armstrong Patents [1986] AC 577, which criticised the claimant’s reliance on copyright to prevent a third party making spare parts for its cars, provisions were introduced in the CDPA 1988 which considerably curtailed the ability of a designer to obtain protection through the law of copyright.

In its place there is a copyright-right type right, the unregistered design right, though there is some residual copyright protection available in the case of articles which amount to artistic works in their own right. The United Kingdom unregistered design right is quite unique, having criteria which are quite different from those applicable in the United Kingdom registered designs system and the EU registered and unregistered designs system.

9.1.1 Revision of the Registered Designs ActRegistered designs have more in common with patents (until 1949 patents and designs were dealt with in the same Act). However, the RDA was extensively revised, with effect from 9 December 2001, to take account of the EU Designs Directive (Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs [1998] OJ L 289/28). The criteria for registered design protection are now quite different to those obtaining prior to this date. (You should ensure that any materials you read refer to the law as it stands after December 2001.)

9.1.2 European Union regulationAt the same time as directing Member States to amend their national design laws, the EU has also, by means of the Regulation on the Community Design (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs, [2002] OJ L3/1, which came into force on 5 March 2002), introduced a pan-European system for protecting designs by means of registration with the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) in Alicante, Spain. The criteria for national and EU protection of registered designs, found respectively in the Directive and Regulation, are identical. The EU registered design right provides protection in all 27 EU Member States by means of a single registration. The same Regulation also provides for informal protection (i.e. not dependent on registration) by means of the EU unregistered design right. A designer therefore can choose between having:

u a United Kingdom or EU registered design (both of which can last for a maximum of 25 years and both of which have the same rules for what is registrable and what amounts to infringement)


u a United Kingdom unregistered design, having a theoretical maximum period of protection of 15 years (which in reality is five years) but with its own unique rules

u a EU unregistered design (for a maximum period of three years from the date of publication of the design and having the same basic criteria as for registered designs)

u in limited circumstances, United Kingdom copyright.

Relying on a registered design (whether United Kingdom or EU) is advantageous in that it is a true monopoly right. Any claimant does not have to show copying of the design when suing for infringement, but does run the risk of a counterclaim that the design is invalid. By contrast, relying on unregistered design right or copyright means, on the one hand, that protection is instantaneous and free, but on the other, the claimant has to prove copying of his/her design, or at the very least, that the infringer had the opportunity to copy (LB (Plastics) v Swish Products [1979] RPC 551).

Activity 9.1 You have an English friend who is a designer. She wants legal protection for a design she developed while working in the United Kingdom. Explain her choices, outlining the maximum duration of each type of protection. What are the advantages and disadvantages of each type?


9.2 The registration system

Essential reading ¢ Bainbridge, Chapter 17: ‘Community Design and the UK Registered Design’

pp.585−608.

¢ Bently and Sherman, Chapter 25: ‘Acquiring Registered Design Protection in the United Kingdom and the Community’ pp.615−25 and Chapter 26: ‘The Community Concept of Design’ pp.626−58.


¢ Norman, Chapter 11: ‘Designs’ section 11.2.

As noted above, the RDA was amended with effect from 9 December 2001 by the Registered Designs Regulations 2001 (S.I. 2001 No 3949) so as to comply with the obligations of the EU Designs Directive. You will find a consolidated version of the RDA in your statute books.

Because the RDA was amended in order to comply with the Designs Directive, and because the Directive is a mirror image of the EU Design Regulation, what follows is also a concise summary of the new EU law on registered and unregistered designs.

9.2.1 Registration procedureUnited Kingdom registration procedure continues (as before) to consist of filing, examination by the Designs Registry for compliance with formalities, and grant. In parallel with the EU designs system, there is no longer any examination with regard to whether the application meets the substantive requirements for registration, it being left to a third party to challenge the validity of the design in subsequent proceedings. The application form must show clearly what design is to be protected (photographs and/or drawings showing the article from various angles are the normal means) and to indicate the products in which the design will be incorporated or to which it will be applied. The maximum period for the completion of the registration process is 12 months. Once the registration is granted, it will last for an initial period of five years, with four further five-year renewal periods possible (25 years’ maximum).

You do not need to know about the old law on registered designs, and you may therefore ignore any passages in the essential reading which discuss the old law in any detail.


9.2.2 Definition of ‘design’Under the RDA section 1(2):

u ‘Design’ now means ‘the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or its ornamentation’.

u ‘Product’ (section 1(3)) means ‘any industrial or handicraft item other than a computer program; and, in particular, includes packaging, get-up, graphic symbols, typographic type-faces and parts intended to be assembled into a complex product’.

u ‘Complex product’ (also section 1(3)) means ‘a product which is composed of at least two replaceable component parts permitting disassembly and reassembly’. You should note that in contrast to the old law, it is now possible to obtain protection for part of a product and for its internal features.

9.2.3 Criteria for protectionThe amended RDA has two positive criteria which a design must satisfy in order to be registrable, namely novelty and individual character. The requirement of novelty was in the old law, but now has a different meaning, the new definition being very similar to that found in the law of patents (see Chapter 16).

u Novelty now means that a design is new if no identical design or no design whose features differ only in immaterial details has been made available to the public before the relevant date. ‘Making available’ bears the patent meaning of published (whether following registration or otherwise), exhibited, used in trade or otherwise disclosed anywhere in the world, unless these events could not reasonably have become known in the normal course of business to the circles specialised in the sector concerned in the EEA, or unless the disclosure was in breach of confidence or unless the disclosure was by the designer within the 12 months ‘grace’ period calculated from the filing/priority date (section 1B(5)). The fact that a design will not be treated as having been made available to the public where it was disclosed in breach of confidence emphasises the practical importance of designs being kept secret prior to the design application being filed. If it is necessary for the designer to reveal the design to another before the filing date (for example, for evaluation or testing), then a suitable confidentiality undertaking should be obtained. (You should reread your notes on Chapter 5 if you are unsure about breach of confidence.)

u Individual character means that the overall impression which the design produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public before the relevant date (section 1B(3)); in other words, designs are compared through the eyes of a prospective purchaser to see what impact they have on such a person’s perception. In deciding whether the design has individual character, the degree of freedom of the author in creating the design shall be taken into consideration (section 1B(4)). In the case of component parts of a complex product, these must be visible in normal use. Hidden parts cannot be considered when determining the extent of novelty and individual character of the visible parts.

9.2.4 Exclusions from protectionIn summary, the exclusions from protection are:

u features dictated by technical function (which is similar to the exclusion for functional features under the old law) and ‘must fit’ features (although this exclusion is declared not to prevent the protection of modular systems)

u designs contrary to public policy or morality

u designs for specially protected emblems (a similar list appears in section 4 of the Trade Marks Act 1994)

u designs which conflict with earlier EU or United Kingdom registered designs.


9.2.5 Ownership and the rights of the design right ownerThe rules on ownership are unchanged from those prevailing under the previous version of the RDA and are a mirror image of those which apply to the unregistered design right (explained in detail below). Section 2 of the RDA declares that the design belongs to the designer, except where it was commissioned or made in the course of employment, in which case it is owned by the commissioner of the design or the designer’s employer.

Identification of the owner of the right is important, because only the owner can sue for infringement. Section 7(1) RDA declares that registration gives the exclusive right to use the design and any design which does not produce on the informed user a different overall impression, ‘use’ comprising making, offering, putting on the market, importing, exporting or using a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes. This provision is almost identical to the infringement provisions found in section 60(1) of the Patents Act 1977 (see Chapter 18). You should note that the scope of protection accorded to the owner under section 7 of the RDA is not limited to the articles for which the design was registered, but extend to any article to which the design is applied by the infringer (so, for example, a design for a saucepan lid would infringe if a similar design is applied to a hat).

Defences to infringement (set out in section 7A of the RDA) include consent, private and domestic use, experimental use, reproduction for educational purposes, use of equipment on aircraft and ships temporarily within the United Kingdom, the importation of spare parts for the repair of such aircraft and ships, the carrying out of such repairs, exhaustion of rights and the use of components to repair a complex product. Again, these defences are very similar to those found in section 60 of the Patents Act 1977 (see Chapter 18).

9.2.6 InvalidityAs a result of the EU Designs Directive, there are now comprehensive provisions as to when a registered design may be declared invalid, which are set out in section 11ZA of the RDA. These are, first, that the design in question does not satisfy the definition of design in section 1(2), that it is not new nor does it have an individual character, that it is dictated by technical function, that it consists of a specially protected emblem or that it is contrary to public policy. An application to have the design declared invalid on any of these grounds may be brought by any person. Other grounds of invalidity are that the registered proprietor is not entitled to the design, or that the design is similar to an earlier registered EU or United Kingdom design, or that it infringes an earlier registered trade mark or that it infringes an earlier copyright. In the case of these further grounds of invalidity, the application may only be brought by the owner of the relevant earlier right.

9.2.7 Differences between the old and new lawCertain aspects of the old law have disappeared. It is no longer necessary for the design to have aesthetic appeal (or ‘eye appeal’) nor need it be applied to an article by an industrial process (hence the term ‘industrial designs’ is now something of a misnomer). The product need no longer be mass produced, as the inclusion of ‘handicraft’ items in the definition means that ‘one-off’ products are now protected. ‘Must match’ parts can now be registered (for example, the body panels of a car), but the registered design cannot be enforced in respect of their use for repair purposes. Registered design right will be enforceable against the use of the design on any product, not just the product in respect of which it has been registered (thus broadening considerably the scope of the monopoly). Compulsory licences and licences of right are no longer available.


Self-assessment questions1. What is the meaning of ‘design’ under the Registered Designs Act?

2. What two features must a design have in order to be registrable?

3. What are the defences to infringement set out in Section 7A of the RDA?

SummaryRegistration as a means of protection of the appearance of a product creates a true monopoly, and so in one sense is the best method of protection. The owner does not have to prove copying in order to succeed in an infringement action. There is, however, the time and expense of registration. The RDA, amended to take account of the EU Designs Directive, contains new provisions containing the definition of ‘design’, the requirements for registration, the grounds of invalidity, ownership and infringement.

9.3 Copyright protection for designs


¢ Bently and Sherman, Chapter 29: ‘Copyright Protection for Designs’ pp.678−81.


¢ Norman, Chapter 11: ‘Designs’ section 11.3.1.

¢ Chapter 7 of this subject guide (on artistic works) and Chapter 8 (on the meaning of ‘copying’ as a restricted act).

¢ Cases: Wham-O Manufacturing Co v Lincoln [1985] RPC 127; Hensher v Restawile Upholstery [1976] AC 64; Vermaat & Powell v Boncrest Ltd [2001] FSR 43; Hi Tech Autoparts v Towergate Two Ltd (Nos 1 and 2) [2002] FSR 254 and 270; Lucasfilm Ltd v Ainsworth [2009] FSR 103 (Mann J), [2009] EWCA (Civ) 1328 (CA).

The CDPA 1988 section 4 provides for copyright to subsist in artistic works. The section lists three principal categories of artistic works. What concerns us are those appearing in section 4(1)(a) (‘a graphic work, photograph, sculpture or collage, irrespective of artistic quality’) and section 4(1)(c) (‘a work of artistic craftsmanship’).

With regard to section 4(1)(a), you should recollect from Chapter 7 that the threshold for protection is very low and that ‘graphic work’ is defined very broadly in section 4(2). An illustration of this low threshold is the decision in British Northrop v Texteam Blackburn [1974] RPC 57, where Megarry J held that drawings for machine parts were ‘plainly’ copyright artistic works. Indeed, it has been said that ‘anything which goes beyond a single line on a piece of paper is a drawing’. You should note further that section 4(1)(a) includes three-dimensional items such as sculptures, and that ‘graphic work’ includes etchings and engravings. The potential of section 4(1)(a) to protect everyday articles is illustrated by the decision of the New Zealand court (on similarly worded New Zealand legislation) in Wham-O Manufacturing Co v Lincoln [1985] RPC 127, and by the recent United Kingdom decisions in Hi Tech Autoparts v Towergate Two Ltd (Nos 1 and 2) [2002] FSR 254 and 270.

With regard to section 4(1)(c), you should recollect from Chapter 7 that the phrase ‘work of artistic craftsmanship’ involves a composite concept, so that the work in question has to have both ‘eye appeal’ and to have been made by hand by a skilled person. If you have not already done so, you should read the decisions in Hensher v Restawile and Vermaat & Powell v Boncrest Ltd listed above. You should also read the first instance judgment in Lucasfilm Ltd v Ainsworth [2009] FSR 103 (Mann J), as it contains an excellent explanation of ‘sculpture’ and ‘work of artistic craftsmanship’: an understanding of these two concepts is crucial to the law of designs.


The importance of copyright in protecting the appearance of articles is revealed by the wording of section 17(3) of the CDPA which provides that a two-dimensional artistic work is ‘reproduced in any material form’ by being converted into a three-dimensional form and vice versa. Hence in LB (Plastics) v Swish Products [1979] RPC 551 (a decision relating to the identically worded provision in the Copyright Act 1956), the House of Lords held that the claimant’s two-dimensional drawings for furniture were infringed by the defendant’s own version of the product.

Copyright has the advantage of giving the designer instant protection but to succeed, the claimant must show copying, that is, prove derivation and substantial taking under the test in Designers Guild Ltd v Russell Williams (Textiles) Ltd [2000] 1 WLR 2416 discussed in Chapter 8. If you are unclear about the Designers Guild test for copyright infringement, then you should reread the speech of Lord Millett.

Activity 9.2Read sections 4(1) and 4(2) of the CDPA carefully, together with the cases listed above in your essential reading. Then consider what type of artistic work each of the following might be.

u A hand-carved piece of furniture.

u A porcelain figurine shaped like a dolphin and made into the base of a table lamp.

u A doormat made of rubber which has special grooves cut on the underside to stop it slipping.

9.4 Statutory provisions curtailing copyright


¢ Bently and Sherman, Chapter 29: ‘Copyright Protection for Designs’ pp.681−85.


¢ Norman, Chapter 11: ‘Designs’ section 11.3.2.

¢ Cases: British Leyland v Armstrong Patents [1986] AC 577; Mackie Designs Inc v Behringer Specialised Studio Equipment (UK) Ltd [1999] RPC 717; Lucasfilm Ltd v Ainsworth [2009] FSR 103 (MannJ), [2009] EWCA (Civ) 1328 (CA); Flashing Badge Co Ltd v Groves [2007] ECDR 308.

Over the years the ability of a designer of a very simple article to rely on the instant yet long-lasting protection of copyright has attracted criticism, particularly where the article was derived from a copyright drawing. Because the current restrictions in sections 51 and 52 of the CDPA 1988 on the use of copyright to protect designs are the direct result of case law decided under the Copyright Act 1956, as amended, a brief account of the old law will help you to gain insight into provisions which are not easy at first glance to understand.

9.4.1 Historical background to the present restrictions on the use of copyright to protect designsThe Copyright Act 1956 contained two provisions which attempted to curtail a designer’s ability to rely on copyright. First, there was the so-called ‘non-expert defence’ in section 9(8) which provided that where, for example, the defendant had made a three-dimensional copy of a two-dimensional drawing, there was to be no copyright infringement if the defendant’s reproduction would not appear, to persons who were not experts in relation to objects of that description, to be a reproduction of the artistic work. This provision was not repeated in the CDPA, so nothing further need be said about it.


Second, in the original version of section 10 of the 1956 Act, there was a deliberate exclusion from copyright protection of any design which was or could have been registered under the RDA. This latter provision was interpreted by the Court of Appeal to mean that designs which were not capable of registration (for example, because they were for functional rather than aesthetic articles) were not within the exclusion and therefore got the full benefit of ‘ordinary’ copyright: Dorling v Honnor Marine [1964] RPC 160, an outcome described as ‘bizarre’ by the Whitford Committee. Section 10 was amended by the Design Copyright Act 1968 so as to confer copyright protection on registrable designs but only for a period of 15 years from the date of first marketing. The designer was therefore given a choice either to claim registered protection or rely on a shortened term of copyright protection. The amended section 10 was interpreted by both the Court of Appeal and the House of Lords to have the same scope as the original section 10, that is, that non-registrable designs based on simple engineering drawings fell outside the scope of the provision and so still got the full benefit of ‘ordinary’ copyright: see British Leyland v Armstrong Patents [1984] 3 CMLR 102 at 133, 140, [1986] AC 577. However, in the same case, the House of Lords created the defence of ‘non-derogation from grant’: where an article which was derived from a copyright drawing needed repair, the copyright owner could not rely on their copyright in the drawing to prevent a third party making spare parts. This defence was required in the interests of public policy to prevent the abusive exploitation of copyright in everyday items. The invention of such a defence (almost out of thin air, albeit prompted by policy concerns) created uncertainty and was subsequently criticised.

9.4.2 The restrictions in the 1988 Act on the use of copyright to protect designsAgain, there are two sections in the CDPA which curtail the rights of the copyright owner.

Section 51(1) provides that it is not an infringement of any copyright in a design document or model recording a design for anything other than an artistic work to make an article to the design. Under section 51(3) ‘design’ means the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article, other than surface decoration; and ‘design document’ means any record of a design, whether in the form of a drawing, a written description, a photograph, data stored in a computer or otherwise (these definitions are repeated in Part III of the CDPA dealing with the unregistered design right). You should note the breadth of the definition of ‘design document’: any copyright (whether literary or artistic) which may subsist in the design document will be caught by section 51(1) (per Pumfrey J in Mackie Designs Inc v Behringer Specialised Studio Equipment (UK) Ltd [1999] RPC 717 at 720).

Three important observations must be made about the wording of section 51(1).

u First, you should note carefully that the section does not say that copyright does not subsist in a design document for an article: rather it declares that the copyright existing in a design document is not infringed where an article is made to that design. A designer will therefore have copyright in the design document (and that copyright will be infringed if a third party merely copies the document in two-dimensional form), but the designer is unable to sue for copyright infringement if a third party copies the design document directly or indirectly in order to make articles. In such a situation, the designer is forced to rely on the protection offered by the unregistered design right in Part III of the CDPA, explained in detail below.

u Next, the key word in section 51(1) is the word ‘for’. When applying section 51(1) in the context of a problem question about design right, you should always ask the question ‘is this a design document for an article’? If the design document is not for an article (e.g. if an artist creates a painting of a bowl of fruit, the painting will not be a design document for the bowl itself), the section does not apply and any copying in any format will amount to copyright infringement.


u Lastly, it must be determined whether the article to be made from the design document is an artistic work in its own right. If it is (for example, if it is a sculpture or a work of artistic craftsmanship) then again, section 51(1) has no application and the full force of copyright law (with one exception, explained next) is available to the designer. If, however, the article is not an artistic work in its own right, then the designer cannot sue a third party for making articles derived from the design document but must rely on the unregistered design right. An illustration of this comes from Jo Y Jo Ltd v Matalan Retail Ltd [2000] ECDR 178 where the claimant’s clothing design was copied and it was held that section 51(1) prevented them from suing the defendants for copyright infringement. A more problematic case is BBC Worldwide Ltd v Pally Screen Printing Ltd [1998] FSR 665 where the defendant had printed pictures of the ‘Telly Tubbies’ on T-shirts. Although it was an application for interim relief (and so the arguments were not made in full) it may be questioned whether Laddie J was correct to accept the section 51 defence, as the designs were used as two-dimensional decoration, not to make a three-dimensional article. A case which neatly illustrates the issue of whether something is or is not an artistic work in its own right is Flashing Badge Co Ltd v Groves [2007] ECDR 308: here there was a design for a badge (which of itself was not an artistic work) and a design for the artwork to be applied to the surface of the badge. The former fell within section 51(1), the latter did not.

The categories of artistic work which are most likely to be in issue when the section 51 defence is raised are ‘sculptures’ and ‘works of artistic craftsmanship’: for this reason it is vital that you have read and understood what was said in Lucasfilm Ltd v Ainsworth about these two concepts.

The other restriction on the use of copyright in relation to designs is to be found in section 52 of the CDPA 1988. This provides that where an artistic work has been applied industrially (that is, the work has been exploited by the mass-manufacture of copies) after the end of 25 years from first marketing, the work may be copied without infringing copyright in the work. The effect of this is to cut short the duration of copyright protection to 25 years (so as to correspond to registered design protection). Where, therefore, an article is not caught by section 51 (because it counts as an artistic work), should the designer exploit it industrially, s/he cannot claim a longer period of protection than would have been available had they registered the design under the RDA. Exploitation by an industrial process generally means that more than 50 copies are manufactured (see The Copyright (Industrial Process and Excluded Articles) (No 2) Order 1989, to be found in your statute book).

Activity 9.3Study the wording of section 51(1) of the CDPA carefully and then decide whether the creator of the relevant design document can rely on copyright to prevent the making of three-dimensional articles based on the design document in the following situations.

u A drawing of a dust collecting bag for a vacuum cleaner.

u A sketch for a wedding dress to be worn by a member of the Royal Family, the dress being made by hand by the designer’s employees; after the wedding, the dress is to go on display in the designer’s own gallery.

u A chair which has been copied from a painting of a bedroom scene by a famous artist.


9.5 Unregistered design right

Essential reading u Bainbridge’ Chapter 18: ‘The UK Unregistered Design Right’ pp.611−46.

u Bently and Sherman’ Chapter 30: ‘Unregistered Design Right‘ pp.686−707.

u Cornish’ Chapter 15: ‘Industrial Designs’ paras 15-37 to 15-51.

u Norman, Chapter 11: ‘Designs’: section 11.4.

u Cases: Farmer Build Ltd v Carier Bulk Handling Materials Ltd [1999] RPC 461; Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at 421–430 only; Mark Wilkinson Furniture Ltd v Woodcraft Designs (Radcliffe) Ltd [1998] FSR 63; A. Fulton Company Ltd v Grant Barnett & Company Ltd [2001] RPC 257; A. Fulton Company Ltd v Totes Isotoner (UK) Ltd [2004] RPC 301; Sales v Stromberg [2006] FSR 89; Rolawn Ltd v Turfmech Machinery Ltd [2008] RPC 663; Landor & Hawa International Ltd v Azure Designs Ltd [2007] FSR 181; Bailey v Haynes [2007] FSR 199; Dyson Ltd v Qualtex [2006] RPC 769.

As indicated above, the CDPA, having curtailed the use of copyright in relation to designs for articles, provides the designer with a copyright-type right, of much shorter duration. The underlying policy is that ‘some protection should be available to give the manufacturer who has spent money on the design the opportunity to benefit from his investment, thus providing an incentive to further investment’ (White Paper on Intellectual Property and Innovation 1986 (Cmnd 9712) para 3.21).

The provisions in Part III of the CDPA are complex. The key to understanding them is the definition of the unregistered design right found in section 213 of the CDPA. You should work through the material on section 213 very carefully, making sure you understand each component.

Once you have mastered the definition of design right, we shall move on to consider how design right arises under United Kingdom law, who is the owner of the right and what the owner can do to stop others infringing. As you study this later material, you should continually make comparisons with the law of copyright as set out in Chapters 7 and 8.

9.5.1 The definition of design rightSection 213 of the CDPA should be regarded as providing a composite definition of design right. Having declared (in subsection (1)) that ‘design right is a property right which subsists... in an original design’, it then proceeds (in subsection (2)) to define ‘design’ as ‘the design of any aspect of the shape or configuration (internal or external) of the whole or part of an article’. You should note the width of this definition, so that, for example, in the case of a teapot the design could relate to the whole pot, the lid, the spout, the handle, the internal shape of the lid, etc. (Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at 422). Also, there is no need for the design to have artistic merit or eye appeal, it may not be visible during normal use of the article and it may (possibly) be invisible to the naked eye. The design may be quite basic, for example, a simple geometric shape: Sales v Stromberg [2006] FSR 89. However, as design right is concerned with the protection of the design not the article itself, the design could well be applied to other articles (see Electronic Techniques (Anglia) Ltd v Critchley Components Ltd [1997] FSR 401 at 418 where the example is given of a handle for a spoon which could equally be applied to a fork).

If we then dissect section 213(2) into its component parts, the first phrase to be considered is ‘any aspect’. According to Jacob LJ in A Fulton Co Ltd v Totes Isotoner (UK) Ltd [2004] RPC 301 at para 31 this means ‘discernable’ or ‘recognisable’, presumably to the end user of the article (which implies that the design must be visible). The next phrase is ‘shape or configuration’. ‘Shape’ appears to suggest outward appearance or external form, whereas ‘configuration’ means ‘the relative arrangement of the various parts of an article to each other’ (Mackie Designs Inc v Behringer Specialised Studio Equipment (UK) Ltd [1999] RPC 717). The last key word in section 213(2) is ‘article’. This


suggests something which is three-dimensional, but even a ‘flat’ or two-dimensional thing can be an article (see Lambretta Clothing Co Ltd v Teddy Smith (UK) Ltd [2005] RPC 88 where it was suggested that a doily could be an article). Examples of articles in which design right has been recognised include Parker v Tidball [1997] FSR 680 (mobile phone cases); Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 (contact lenses); Mark Wilkinson Furniture v Woodcraft Designs Radcliffe Ltd [1998] FSR 63 (a kitchen unit is an article but the whole fitted kitchen is not).

To return to section 213(1), you will note that it contains the word ‘original’. This is explained in section 213(4) as meaning (for Part III of the CDPA only) ‘[not] commonplace in the design field in question at the time of its creation’. The definitive interpretation of ‘original’ was given by the Court of Appeal in Farmer Build Ltd v Carier Bulk Handling Materials Ltd [1999] RPC 461 at 482 where Mummery LJ explained that the word bears the normal copyright meaning of ‘not copied’. He added that section 213(4) entails a two-stage enquiry, namely first, whether the design is original in the copyright sense, and then whether, even if not copied, the design is ‘commonplace’. It is for the claimant to prove originality, but it is for the defendant to show that the design is commonplace in the United Kingdom. Because of the restricted nature of design right, ‘commonplace’ should be interpreted narrowly rather than broadly so as not to deprive the designer of protection.

As to the meaning of ‘not commonplace’, Laddie J in Ocular Sciences Ltd v Aspect Vision Care Ltd suggested that a design would be commonplace if it was ‘trite, trivial, common-or-garden, hackneyed, or of the type which would excite no peculiar attention in those in the relevant art’.

In order to determine whether a design is commonplace, the test to be applied is as explained in the Farmer Build case at pp.482–83. This is an important test and one which you must learn. The court should identify the design field in question (which should not be drawn too narrowly) and then compare the claimant’s design with similar articles in the same design field made by other unconnected persons, taking into account (with the help of expert evidence) similarities and differences, but making the comparison objectively. The defendant’s design is not to be considered until it is determined whether the claimant’s design passes the test. The test was applied in Scholes Windows Ltd v Magnet Ltd, [2002] FSR 122, where the Court of Appeal decided that the relevant design field for replacement Victorian windows was Victorian windows as a whole (hence the design was commonplace when compared with what had gone before) and in A Fulton Company Ltd v Grant Barnett & Company Ltd [2001] RPC 257, where the court accepted that the claimant’s design for a handle and case for a folding umbrella was not commonplace when compared with existing products on the market.

‘Commonplace’ has a territorial limitation, in that the court will only consider designs which are known to United Kingdom designers, but does not have a temporal limitation, in that old designs can be taken into account (Dyson Ltd v Qualtex [2006] RPC 769). You should note further that design right can exist in a combination of features which individually are commonplace but collectively are not (see Ultraframe UK Ltd v Clayton and others [2003] RPC 435 at 457 which concerned the design for a frame for a conservatory roof).

Negative criteria excluding design right

Having considered the positive elements which go to make up the definition of design right, we must now turn to the negative criteria, namely those features of shape which are excluded from protection. When dealing with the exclusions, the technique to be deployed by the court is to subtract from the design those features which fall within the exclusions, then apply the ‘not commonplace’ test to what is left in order to identify the relevant design (Ultraframe UK Ltd v Clayton).

Under section 213(3), design right does not subsist in four aspects of a design. The first exclusion relates to a method or principle of construction (section 213(3)(a)). According to Landor & Hawa International Ltd v Azure Designs Ltd [2007] FSR 181 the phrase should be given a narrow construction and will only apply where it can be

‘Doily’: a small ornamental paper or cloth sheet formerly used when serving cakes etc. for dessert. Once it was a common household item, but is rather rare today. A doily is a two-dimensional object


shown that the purpose in question cannot be achieved in any other way. ‘Method of construction’ includes the designer’s choice of materials (see Christopher Tasker’s Design Right References [2001] RPC 39 which concerned a design for sliding aluminium wardrobe doors, the choice of materials for the various components being denied protection) and the location of a fuel tank on a lawnmower: Rolawn Ltd v Turfmech Machinery Ltd [2008] RPC 663. In Bailey v Haynes [2007] FSR 199 the exclusion was applied to deny protection to the mesh of a bait bag used in carp fishing. In the Farmer Build case, a rubber liner used in part of the slurry separator was caught by this exclusion. ‘Method of construction’ also covers how the article is put together. As an example, consider the facts of Parker v Tidball [1997] FSR 680 where it was held that stitching on the inside of a mobile phone case fell within this exclusion, although the court did not consider what the position might be if the stitching were decorative rather than structural.

The next two exclusions, namely ‘must fit’ and ‘must match’ (section 213(3)(b)(i) and (ii)) can be taken together as the underlying policy for both is derived from the decision of the House of Lords in British Leyland v Armstrong (explained above). The policy is concerned to ensure that manufacturers of spare parts can compete with the design right owner by making articles which are compatible with the original. Because of this, the exclusion doesn’t apply to other forms of copyright such as software or databases (Mars UK Ltd v Teknowledge Ltd [2000] FSR 138). The ‘must fit’ and ‘must match’ exclusions are not, however, as broad as the ‘spare parts’ defence in British Leyland v Armstrong (above) as it was not Parliament’s intention to deprive the designer of all protection in relation to spare parts, but only certain aspects of them: Ultraframe UK Ltd v Clayton and Dyson Ltd v Qualtex [2006] RPC 769. When examining these two exclusions, pay particular attention to the very precise wording of section 213: ‘must fit’ and ‘must match’ are simply convenient shorthand phrases which do not fully reproduce the key elements of the exclusions (Dyson Ltd v Qualtex).

‘Must fit’ (‘features... which enable the article to be connected to, or placed in, around or against another article so that either article may perform its function’) is concerned with the ‘interface’ between two articles or ‘things’. Several cases have concluded that parts of the human body can be an ‘article’ for this purpose, so in Ocular Sciences Ltd v Aspect Vision Care Ltd it was held that the internal curvature of a contact lens could not be protected as it had to fit against the wearer’s eye ball; and in Parker v Tidball, part of the shape of the case for the mobile phone had to fit in the user’s hand. It has been suggested, however, that for the exclusion to apply, there must be a precise fit: Amoena (UK) Ltd and Another v Trulife Ltd, 25 May 1995, unreported.

What is not clear is whether this exclusion is concerned with how the component parts of a composite article fit externally to another article (as suggested by Baby Dan AS v Brevi SRL [1999] FSR 377) or whether it is concerned with how the article’s components themselves fit together (as held in Electronic Techniques (Anglia) Ltd v Critchley Components Ltd [1997] FSR 401), but the better view is that it is the Critchley approach which is to be preferred. The key point to remember is that the exclusion is concerned with the interface between a consumable or spare part and the rest of the article: Ultraframe UK Ltd v Clayton and Dyson Ltd v Qualtex.

The ‘must match’ exclusion (‘features... which are dependent upon the appearance of another article of which the article is intended by the designer to form an integral part’) has only recently been examined judicially in the context of Part III of the CDPA in Dyson Ltd v Qualtex. Here Mann J (confirmed by the Court of Appeal) pointed out that an identically worded exclusion was to be found under the old RDA, and that had been considered in detail in Ford Motor Company Ltd’s Design Applications [1995] RPC 167. In the Ford case it was held that the body panels, doors, bonnet, grille, boot, bumper, instrument panel, spoiler and windscreen were all dependent on the appearance of the car as a composite article and so were caught by the exclusion: the parts were all integral to the appearance of the car. The steering wheel, wing mirrors, wheels, wheel covers and seats were not so, and were therefore capable of protection.

Dyson v Qualtex adopts the thinking in Ford. The key word in section 213(3)(b)(ii) is the word ‘dependent’. The question to be asked in each case is whether the overall


appearance of the article (for example, a car) would be radically different if the replacement part (e.g. a door) were not the shape it is (Dyson Ltd v Qualtex at para 64).

The last exclusion (to be found in section 213(3)(c)) is that of ‘surface decoration’. At first glance, it may be asked how decoration could be an aspect of ‘shape or configuration’, but as was made clear in Mark Wilkinson Furniture v Woodcraft Designs Radcliffe Ltd [1998] FSR 63 ‘surface decoration’ can be two-dimensional (e.g. a painting or a drawing) or three-dimensional (e.g. grooves or beading). In the case of the latter, it is a question of degree when the decoration such as carving becomes the shape of the item and hence protectable. Surface decoration is normally protected in its own right as an artistic work under section 4 of the CDPA, but in some cases may not. The choice of colours for a garment was held not to be an aspect of the shape or configuration of the garment in Lambretta Clothing Co Ltd v Teddy Smith (UK) Ltd [2005] RPC 88 and, being surface decoration, was excluded from protection by section 213(3). Further, there was nothing in section 4 of the CDPA which could afford the designer any protection in the instant case. The court added that ‘surface decoration’ applied both where the surface was covered by a thin layer and where the decoration ran right through the article (such as the fabric of a garment). It was pointed out in Dyson v Qualtex that the Lambretta case had very unusual facts, being concerned with an attempt to protect the colour scheme of a garment. A good illustration of how surface decoration is protected as an artistic work under section 4 CDPA is Flashing Badge v Groves.

Activity 9.4 Go over your notes on section 213 of the CDPA carefully, then complete the following chart by supplying the meaning of each of the key words or phrases in the section together with the relevant case law authority (where applicable) on that point:

Key word or phrase Meaning Relevant case(s)

‘Any aspect’

‘Shape or configuration’

‘Article’

‘Original’

‘Not commonplace’

‘Method or principle of construction’

‘Must fit’

‘Must match’

‘Surface decoration’


9.5.2 Subsistence of design rightWhen examining the rules in Part III of the CDPA about when and how design right comes into existence, you should remember to compare them with the rules on copyright which you studied in Chapter 7.

First, and just like copyright, the design right must be recorded in material form: section 213(6) declares that design right does not subsist unless and until it has been recorded in a design document or an article has been made to the design. You should note here that it is not necessary for the design to be in documentary form: it can be recorded in an article.

Next, the design has to qualify for design right protection (section 213(5)). It is here that the first major difference from copyright law is apparent, both with regard to what counts as qualification, and the relevant countries with which the author may be connected.

The starting point is section 218, which declares that where a design is not created pursuant to a commission or in the course of employment, then the designer must be a qualifying person (the designer being the person who creates the design – section


214). If, however, the design was created pursuant to a commission or in the course of employment, then the commissioner or employer must be a qualifying person (section 219).

Finally, as a last resort, if neither the designer, commissioner nor employer are qualifying persons, then the design can qualify for protection if the first marketing of articles occurred in a qualifying country. You should note the very precise order in which section 218 et seq must be applied. Further, the definition of a ‘qualifying person’ is extremely narrow. The person concerned must be a citizen of or habitual resident in the United Kingdom or an EEA Contracting State or a state listed in the relevant Order in Council or must be a company incorporated in or having substantial business activity in the United Kingdom or an EEA Contracting State or a state listed in the relevant Order in Council. Because design right is not governed by an international convention, there are only a few countries listed in the relevant Orders in Council (they are almost all former United Kingdom colonies and the determining factor is whether they provide reciprocal protection for United Kingdom nationals). The net result is that non-European companies are denied protection: Mackie Designs Inc v Behringer Specialised Studio Equipment (UK) Ltd.

The rules on ownership of design right (found in sections 214 and 215) are a mirror-image of the rules on qualification for protection. The designer is the first owner unless there is (1) a commission, in which case the commissioner will be first owner; or if not, (2) a contract of employment, in which case the employer will be first owner; or if neither of these, then (3) the person who first marketed the design in the EEA is first owner. Remember from Chapter 7 that ‘commission’ has quite a specific meaning in copyright law (see Gabrin v Universal Music Operations Ltd [2004] ECDR 18). This meaning applies equally to design right: Sales v Stromberg.

With regard to the duration of design right, the rules are to be found in section 216. This declares that design right expires 15 years from the end of the year of first recordal in a design document or year of first manufacture, whichever is first; or if marketing occurs anywhere in the world within five years of that, ten years from first marketing. Because almost all articles will be made with a view to sale, this means that in effect, the real duration of design right under section 216 is 10 years from first marketing. However, section 216 is further qualified by section 237, which provides that any person (i.e. a potential infringer) is entitled to demand a licence to do in the last five years of the design right term anything which would otherwise infringe the design right. Because of the availability of these licences of right, the overall value of United Kingdom unregistered design right is limited to the first five years of its life.

The right of the owner of the design right to enter into property transactions is treated in exactly the same way as copyright, hence it can be assigned and licensed, and there can be an assignment of a future design right (see sections 222–225 of the CDPA).

Activity 9.5With regard to the subsistence of design right, draw up a list indicating where design right has rules which are the same as copyright, and where those rules differ.

9.5.3 Infringement of design rightWhen compared with copyright, the exclusive rights conferred on the design right owner are much narrower. Unlike the list of restricted acts in section 16 of the CDPA (see Chapter 8), there is only one act of primary infringement for design right to be found in section 226. This states that the owner has the exclusive right to reproduce the design for commercial purposes by making articles to that design or making a design document for the purpose of enabling such articles to be made. Like copyright, reproduction involves copying, exactly or substantially, directly or indirectly, and like copyright, independent creation is a defence: Ocular Sciences Ltd v Aspect Vision Care Ltd. There is also the ability to sue for secondary infringement under section 227, which sets out the usual commercial dealings in infringing copies and which, like the parallel provisions in Part I of the CDPA, stipulate that the defendant must know or have reason to believe that the article in question was an infringing copy. Remedies are set out in


section 229 and are broadly the same as for copyright infringement. There is, however, no provision for seizure of infringing copies, and no criminal penalties. An innocent primary infringer cannot be made to pay damages, but in the case of innocent secondary infringement, damages are limited to the amount of a reasonable royalty (section 233). Where there is an infringement action in the last five years of the right, the infringer can undertake to take a licence of right (sections 237–239).

The last major difference between design right and copyright is the test for primary infringement. Because of the wording of section 226 (‘reproduction... means copying the design so as to produce articles exactly or substantially to that design’) the test for infringement requires that the alleged infringing article or articles be compared with the document or article embodying the design. Thereafter the court must decide whether copying took place and, if so, whether the alleged infringing article is made exactly to the design or substantially to that design. Whether or not the alleged infringing article is made substantially to the claimant’s design must be an objective test to be decided through the eyes of the person to whom the design is directed (per Aldous J in C & H Engineering v F Klucznik [1992] FSR 421 at 428). In other words, it is the similarity of appearance between the claimant’s and defendant’s articles which is the key factor. A different approach was taken in Mark Wilkinson Furniture v Woodcraft Designs Radcliffe Ltd and Mackie Designs Inc v Behringer Specialised Studio Equipment (UK) Ltd which appeared to accord with the views of the House of Lords regarding infringement of artistic copyright in Designers Guild Ltd v Russell Williams (Textiles) Ltd. However, the test in Klucznik has been confirmed as the correct approach to design right infringement in L Woolley Jewellers Ltd v A & A Jewellery Ltd [2003] FSR 255, CA.

SummaryProvided the criteria in section 213 of the CDPA are met and none of the exclusions from protection apply, whether design right arises depends on issues similar to those encountered in the law of copyright. The design must be recorded, and it must qualify for protection. There are significant differences, however, between the law of copyright and the law of designs as to qualification and entitlement. Section 226, setting out what amounts to primary infringement of design right, should be compared with the parallel provisions on copyright infringement.

Activity 9.6With regard to infringement of design right, draw up a list showing how design right differs from copyright.


u summarise the legal means available to protect designs

u explain when a design can be protected under the law of copyright

u explain the circumstances when copyright protection for designs is excluded

u explain and apply the criteria for the protection of unregistered design right under United Kingdom law

u list the key elements in the definition of an unregistered design right.

Sample examination questionAnnie, an Australian citizen living in New York, is a famous potter. Many of her creations have been exhibited at the London Museum of Modern Art. Early in 2010, Annie created a design for a tea-pot. Being rather fond of the English countryside, she decided that the tea-pot should have a ‘rural’ theme. The handle of the lid of the pot was shaped like a flower bud, the spout of the pot was shaped like a bird’s head and the outside of the pot was decorated with an embossed pattern of leaves. The inside of the pot was engraved with a series of parallel grooves around its circumference. When asked why she had done this, Annie replied that she had seen a similar feature in tea-pots in a museum in China and had been told that the grooves enabled the tea to stay hotter for longer.


Annie’s tea-pot was displayed at the London Museum of Modern Art during the summer of 2010 and proved to be a popular exhibit. Annie was subsequently approached by Josiah plc, a United Kingdom pottery manufacture, which wanted to manufacture and sell copies of her tea-pot. After negotiations, Annie agreed. Copies of her pot accordingly went on sale in various United Kingdom department stores in October 2010.

Annie is increasingly concerned about a number of products being sold by the Okea Furniture Store Ltd. The items of concern are:

a. a cooking pot with grooves cut on the inside; the lid of the pot has a handle shaped like a flower bud

b. a watering can with a spout shaped like a bird’s head

c. a coffee mug decorated with a pattern of leaves.

Advise Annie of her rights against Okea under the Copyright, Designs and Patents Act 1988.

Advice on answering the questionWhen tackling a problem on designs, the pivotal question is whether copyright is excluded by section 51 of the CDPA or not. It is therefore a good idea to discuss at the outset whether the design is for an article other than an artistic work. Be prepared to answer in the alternative, because it may not always be clear whether the article in question could be protected as an artistic work.

If the answer to this preliminary question is ‘no’ (so that the article is an artistic work) you need to discuss what sort of artistic work it is under section 4 and then proceed to consider all the other aspects of whether copyright subsists (originality, permanent form, the author (qualifying person), ownership and duration (note, section 52)). You can then move on to consider what infringing acts have been committed and by whom, dividing your answer between primary infringement (section 16 and in particular sections 17 and 18) and secondary infringement (sections 22 and 23). Are there any defences? What remedies might be claimed?

If the answer to this preliminary question is ‘yes’ (i.e. the article is not an artistic work) you need to work through the statutory provisions and supporting case law on design right. Go through the composite definition in section 213 of the CDPA: is the design original and ‘not commonplace’ (Farmer Build); is it recorded; who is the designer (and are they a qualifying person). Who is the owner? Duration? Then consider what infringing acts: primary (section 226 – narrower than copyright) or secondary (section 227). What defences? What remedies?

A good answer would have dealt with the question in the following manner.

First, as section 51 CDPA is a pivotal section, there should have been a discussion as to whether the first design for the teapot in 2010 was an artistic work or not. If it was an artistic work in its own right, then section 51 would not apply. Could it have been a work of artistic craftsmanship in the light of cases like Hensher and Boncrest, especially as it was exhibited in a museum (the fact that subsequent copies were mass produced would have no effect on whether the first teapot was a work of artistic craftsmanship). If so, was it original, recorded in permanent form and was Annie a qualifying person under Part I CDPA (i.e. a citizen of or domiciled or resident in a Convention country)? Both Australia and the USA are members of the Berne Convention, so there would be no problem here, and Annie, as the creator of the artistic work, would be first owner and therefore able to sue for infringement. If the requirements for subsistence of copyright were satisfied, then what restricted acts had Okea committed under section 16 CDPA (copying and issuing copies seem the most likely), assuming that there was objective similarity and derivation?

If, however, the original teapot was not a work of artistic craftsmanship, then the design for the teapot would have been caught by the defence to copyright infringement in section 51 and Annie would instead have to rely on unregistered design right under section 213 CDPA. The various elements of section 213 required


elaboration. Was the design concerned with ‘any aspect of the shape or configuration’, whether ‘internal or external’, of the ‘whole or part of’ an article? Was the design original and ‘not commonplace’ under the test in Farmer Build? Were the four aspects of the design mentioned in the question caught by any of the exclusions (the handle, the internal grooves, the spout and the leaf pattern)? If they were, they would not attract protection. The internal grooves might be regarded as a ‘method of construction’ but the fact that Annie got her inspiration from a museum in China did not make such grooves ‘commonplace in the design field in question’ as the design field is limited to the United Kingdom (Dyson v Qualtex). The embossed pattern of leaves would probably be surface decoration, but in contrast to the decision in Lambretta, this particular surface decoration would probably attract copyright protection as an engraving. The handle of the lid (note, the question does not say anything about the lid itself, so the must fit exclusion is not relevant) and the spout would probably be protected. However, Annie, as designer, was not a qualifying person, but qualification for and ownership of the design right would result from Josiah being the first marketer of the design (CDPA section 220 and 215). Josiah, as owner, would have to sue Okea for infringement under section 226. The fact that the design features were applied to other articles is irrelevant (see Electronic Techniques (Anglia) Ltd v Critchley Components Ltd). The test for design right infringement is as explained by Aldous J in C & H Engineering v F Klucznik, that is, whether or not the alleged infringing article is made substantially to the claimant’s design is an objective test decided through the eyes of the person to whom the design is directed. In other words, would the consumer think that Okea’s articles looked like Annie’s teapot?


Reflect and review








Need to study again

I can summarise the legal means available to protect designs.

¢ ¢ ¢

I can explain when a design can be protected under the law of copyright.

¢ ¢ ¢

I can explain the circumstances when copyright protection for designs is excluded.

¢ ¢ ¢

I can explain and apply the criteria for the protection of unregistered design right under United Kingdom law.

¢

¢

¢

I can list the key elements in the definition of an unregistered design right..

¢ ¢ ¢


Must revise

Revision done

9.1 Overview of the various means of protecting designs ¢ ¢

9.2 The registration system ¢ ¢

9.3 Copyright protection for designs ¢ ¢

9.4 Statutory provisions curtailing copyright ¢ ¢

9.5 Unregistered design right ¢ ¢


Notes

Contents

Introduction 140

10 1 Thehistoryoftrademarksandtrademarklaw 141

10 2 Thenatureoftrademarks 143

10 3 Thefunctionsoftrademarks 145

10 4 ThesignificanceoftheEUTradeMarksDirectiveandtheCommunityTradeMarkRegulation 149


10 Introduction to trade marks


Introduction

The purpose of this chapter is to provide an introduction to the four chapters which follow. It will provide a brief historical account of the factors which have affected the development of United Kingdom trade mark law. It next gives an overview of the nature of the trade mark right, comparing and contrasting trade marks with other types of intellectual property (you may find it helpful to refer back to your notes from Chapter 2 at this stage). The functions which trade marks fulfil is a key aspect of modern trade mark law and we shall consider whether legislation and case law reflects the expectations of trade mark owners and consumers.

Present day United Kingdom trade mark law is the result of a rapid process of ‘Europeanisation’. This chapter will conclude by explaining how EU legislation has dictated the content of the Trade Marks Act 1994 and, more importantly, how the case law of the ECJ has extended and refined the nature of the trade mark right.

The contents of this chapter are not examinable as such. However, they form the foundation to the material which follows. In particular, the discussion of the legally recognised functions of trade marks is crucial for your understanding of passing off, the registrability of trade marks and the scope of protection to be accorded to them in the infringement action. You should concentrate on this aspect.


u explain the historical factors which have influenced present-day United Kingdom trade mark law

u compare and contrast the nature of the trade mark right with other forms of intellectual property protection

u discuss the various commercial functions performed by trade marks and whether these are recognised in legislation and case law

u explain the way in which EU law influences the law of trade marks in the United Kingdom

u list the functions which trade marks perform.

This chapter is an introduction to Chapters 11–14.

Intellectual property 10 Introduction to trade marks page 141

10.1 The history of trade marks and trade mark law

Essential reading ¢ Bainbridge, Chapter 19: ‘Trade Marks – Introduction and Background’ pp.665–61.

¢ Bently and Sherman, Chapter 31: ‘Introduction to Passing Off and Trade Marks’ pp.711–15.

¢ Cornish’ Chapter 16: ‘Competitor and Consumer’ paras 16-04 to 16-12.

¢ Norman, Chapter 12: ‘Introduction to Trade Marks’ sections 12.1 to 12.3.

10.1.1 The historical origin of trade marksTrade marks have been around for many thousands of years. The earliest example is the practice of branding cattle to indicate ownership (hence one modern synonym for a trade mark, ‘brand name’). There is extensive archaeological evidence of the use of trade marks on pottery in ancient China. Remains from the Greek and Roman empires also show extensive use of marks.

In medieval Europe, trade marks were used in two ways.

First, they were used as proprietary marks, that is, as a means of indicating ownership. Placing one’s mark (often the initials of one’s name) on goods would enable a trader to recover property upon proof of ownership of their mark (remember that at this time, the transport of goods was a hazardous business, with the frequent risk of piracy or shipwreck). This practice was recognised by legislation in many European trading cities and states. The relevant legislation in England was enforced as late as Hamilton v Davis (1771) 5 Burr 2732 by Lord Mansfield.

The second way in which a trade mark could be used in medieval Europe was as a production mark. This was a consumer protection measure. At the time, craftsmen (swordsmiths, goldsmiths, breadmakers, ropemakers, etc.) were required to be members of the appropriate craft guild. The guild was responsible for overseeing the quality of goods produced by their members. This quality control was enforced by national, local and guild regulations that required goods to be marked with the maker’s sign, so that faulty workmanship could be traced. These laws were enforced by criminal penalties. No trader had goodwill in his business (even though goods were usually bought direct from their maker), instead the guild had a collective goodwill.

The key historical factor which led to the development of modern trade mark law was the advent of the Industrial Revolution. This resulted in goods being mass-produced in factories, and then being transported long distances before being sold to the consumer by retailers rather than the original maker. The era of the consumer society had begun.

10.1.2 The development of trade mark lawIn the United Kingdom, the legal protection of trade marks is (historically speaking) relatively recent. The case law foundations were laid before 1875. After this date, the developments are primarily statutory.

Books (and indeed even modern cases – see Aldous LJ in Marks & Spencer plc and others v One in a Million Ltd [1998] 4 All ER 476) often declare that the first trade mark case was Southern v How (1618) Popham 143. The case is in fact about agency and its only link with the law of trade marks is an irrelevant aside by the judge. Instead, trade mark cases only begin to appear in the law reports in the eighteenth and nineteenth centuries. It is convenient to divide them into common law and chancery cases.

Common law cases

The earliest common law cases are reported in the nineteenth century. The action for trade mark infringement (which was derived from the action of deceit) emphasised the need for proof of fraudulent intent on the part of the defendant, irrespective of


any actual deception as to the origin of the goods on the part of the consumer and irrespective of whether the defendant’s goods were inferior (see, as examples, Sykes v Sykes (1824) 3 B & C 543, Blofeld v Payne (1833) 4 B & Ad 409 and Crawshay v Thompson (1842) 4 Man & G 358).

Chancery cases

By contrast, early cases decided by the Court of Chancery (where the claimant sought an injunction to restrain infringement rather than the payment of money to compensate for lost sales) show a reluctance to protect trade marks. In both Blanchard v Hill (1742) 2 Atk 484 and Cruttwell v Lye (1810) 17 Ves 335, relief was refused because otherwise an unfair monopoly would be created. This is a theme which often occurs throughout the law of trade marks. We shall examine it again in the next section, and it is something you will encounter in your reading of trade mark cases.

Ultimately, however, the Court of Chancery did recognise that there should be protection for the ‘get up’ of a business (see Knott v Morgan (1836) 2 Keen 213 where the defendant was restrained from copying the colour scheme and lettering used on the claimant’s omnibuses). Significantly, within two years of this last case, the Court of Chancery declared that trade marks were a form of property (Millington v Fox (1838) 3 My & Cr 338), so that liability for infringement did not depend on evidence of confusion. As trespass to a property right, liability was strict and did not depend on intention or harm.

Cases decided after Millington v Fox are contradictory. Some followed the common law by requiring the likelihood of deception to be proved before granting injunctive relief (see for example Perry v Trufitt (1842) 6 Beav 66, Croft v Day (1843) 7 Beav 84 and Burgess v Burgess (1853) 3 De G, M & G 896). Others treated trade marks as property, so that deception was irrelevant (see Hall v Barrows (1863) 4 De G, J & S 150, Edelsten v Edelsten (1863) 1 De G, J & S 185 and Leather Cloth Co v American Leather Cloth Co (1863) 4 De G, J & S 137).

After 1875, the history of trade mark law is concerned with legislative reform. The first legislation to note is in fact not concerned with trade marks. The Judicature Acts 1873–1875 reformed the legal system, combining the courts of common law with the Court of Chancery in a single Supreme Court of Judicature. Trade marks cases (and indeed other forms of intellectual property dispute) were assigned to the Chancery Division. As a general principle, the rules of equity were to prevail over the rules of common law. Interestingly, in the case of trade marks, this seems not to have occurred. The law of passing off (discussed in the next chapter), the present day descendant of the case law mentioned above, is firmly rooted in the common law requirement that the defendant’s use of the claimant’s mark must cause customer deception (although deception now has a much broader meaning than before, so to that extent it does reflect the influence of the Court of Chancery).

The first Trade Marks Act

In the same year as the reform of the legal system, the Trade Marks Registration Act was passed. As its name suggests, the 1875 Act introduced the first system of registration for trade marks. Thereafter, there was a succession of Trade Marks Acts. The ones you are most likely to come across in your reading are those of 1905 and of 1938, each of which effected major reforms. The Trade Marks Act 1938 was reviewed by the Mathys Committee in 1975 (Cmnd 5601). The report recommended a major overhaul of trade mark law, but only one change was made as a result of the Report, namely the introduction of protection for service marks by the Trade Marks (Amendment) Act 1984.

Reform of the Trade Marks Law White Paper

In September 1990, the Government published the White Paper Reform of Trade Marks Law (Cm 1203). It identified a number of reasons why United Kingdom trade mark law was by then in urgent need of reform. These included that:


u the existing legislation was out of date and unwieldy

u the United Kingdom had to implement the EU Trade Marks Directive

u the United Kingdom Trade Marks Registry needed to establish a system of cooperation with the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) because of the Community Trade Mark Regulation (now referred to as the EU Trade Mark as a result of the Lisbon Treaty)

u the United Kingdom was obliged to ratify the latest version of the Paris Convention

u the United Kingdom wished to ratify the Madrid Protocol 1989 (this is part of the system facilitating the international registration of marks; it is not part of your syllabus).

These, then, are the reasons underlying the Trade Marks Act 1994.

SummaryThe history of trade marks can be divided into factual and legal developments. Factual developments reflect the nature of society and in particular the way in which trade is conducted. This last point can be illustrated by comparing the use of trade marks in medieval society with the use of trade marks after the advent of the Industrial Revolution. Legal developments in the United Kingdom can in turn be sub-divided into the initial recognition of trade marks by judges, using the existing causes of action (such as the action for deceit) as the means of protecting business interests, and legislative reform in order to meet modern trading needs.

10.2 The nature of trade marks

Essential reading ¢ Bainbridge, Chapter 19: ‘Trade Marks – Introduction and Background’ pp.665–61.

¢ Bently and Sherman, Chapter 31: ‘Introduction to Passing Off and Trade Marks’ pp.715–17.

¢ Cornish, Chapter 16: ‘Competitor and Consumer’ paras 16-22 to 16-31.

¢ Norman, Chapter 12: ‘Introduction to Trade Marks’ section 12.4.

¢ Chapter 2 of this subject guide (overview of intellectual property rights).

10.2.1 Trade marks as personal propertyIn common with other statutory intellectual property rights, a trade mark is an exclusive right. It confers on its owner the right to prevent someone else from making use of the trade mark.

The Trade Marks Act 1994 section 2 declares that registered trade marks are personal property, in the same way that all other forms of intellectual property are classified as intangible rights. Certainly, a trade mark has some (but not all) of the attributes of a right of property. It can be sold and licensed, and can be security for a debt. It is possible to put a value on a trade mark for the purposes of a company balance sheet (the COCA COLA trade mark has been estimated to be worth $60 billion). However, a trade mark can be removed from the Register (and hence the property right vanishes) for a number of reasons. Not only can it be declared invalid for non-compliance with the requirements of the Act (in the same way that patents and registered designs can be declared to be invalid), but a trade mark can be revoked because of mismanagement by its owner. The grounds of revocation are considered in more detail in Chapter 13, but for the present all you need to know is that they comprise non-use, generic use and deceptive use. No other form of property right can be lost due to the conduct of its owner (English property law does not have any concept of loss of ownership through abandonment or misuse, as opposed to third party intervention such as compulsory purchase).


10.2.2 Trade marks compared to designs and patentsIn some instances there may be overlap between trade marks and other intellectual property rights, particularly designs or copyright. So, for example, a design for a three dimensional article may also be capable of registration as a trade mark (subject to certain exclusions found in section 3(2) of the Trade Marks Act 1994 for trade marks consisting of shapes). There may be both copyright and trade mark rights in a pictorial mark (R Griggs Group Ltd and others v Evans and others [2005] FSR 706) and there may be copyright and trade mark rights in a piece of music, as a tune can be a trade mark (Case C-283/01 Shield Mark BV v Joost Kist [2003] ECR I-14313). Conversely, just because a large amount of money has been expended in the creation of an invented word trade mark, that does not mean it is capable of protection as a literary work under the law of copyright: Exxon Corporation v Exxon Insurance Consultants International [1981] 3 All ER 241.

There are other significant copyright differences between trade marks on the one hand and designs and patents on the other.

u Patents, copyrights and designs protect inventiveness or some other form of intellectual creativity. By contrast, it does not require any ingenuity to think up a trade mark. Even a colour can be a trade mark. Accordingly, trade marks do not fit in with the other categories of intellectual property with regard to the subject matter of the right.

u Unlike patents and registered designs, a trade mark is (with one minor qualification) not an absolute right. Registration enables the proprietor to prevent the use of the identical or similar sign, in relation to identical, similar or dissimilar goods or services. Even though protection is absolute in the case of an identical mark used on identical goods or services (subject to the availability of any statutory defences), other categories of infringement require the proprietor to prove either a likelihood of confusion on the part of the public or that the defendant’s conduct caused harm to the reputation of the mark. However, for each form of infringement, it is not enough simply to use the trade mark in the course of trade. Infringing use has to be in relation to the relevant goods or services and must affect the interests of the trade mark owner (Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273).

u The legal protection accorded to patents, copyrights and designs is said to be justified by the need to reward creativity or to improve the quality of life or (under natural law theories) to protect the product of the intellect as an aspect of the creator’s personality. Trade marks are justified on the grounds they reduce consumer search costs and thereby promote competition and consumer choice.

u However, despite this lack of creativity and different justification, trade marks are potentially the longest lasting intellectual property right. Subject to the periodic payment of renewal fees (every 10 years under United Kingdom law), a trade mark can last indefinitely. Indeed, Trade Mark No 1, registered in 1875 (the Bass ‘Red Triangle’ for beer) is still on the United Kingdom Register.

However, although trade marks do promote consumer choice, at the same time they create barriers to entry. If a trader in a very competitive sector of the economy (for example, soft drinks) wants to introduce a new product, the advertising expenditure to bring that product to the attention of consumers familiar with COCA COLA, PEPSI COLA and FANTA would run into millions of pounds sterling. Powerful brands may be a disincentive to competitors. There is thus a love-hate relationship between trade marks and competition.

One point which you should consider critically when you study the law of trade marks is this: United Kingdom judges often assert that trade marks create an unfair monopoly (as examples, note the remarks of the House of Lords in Re COCA COLA Trade Marks [1986] RPC 421 and of Jacob J in British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281). Are these assertions correct? A trade mark does not create a monopoly in the sense used by economists (which would mean that the brand owner is the


only source of a particular product). Just because there is a trade mark registration for COCA COLA does not mean that its owner is the only company which can make a cola-flavoured soft drink. Other traders can make and sell such products, as long as they adopt a different brand name. Likewise, the COCA COLA registration does not take the word ‘cola’ out of the English language: a botanist can write a learned article about the properties of the cola plant without infringing the trade mark. Is it trade marks’ (potentially) perpetual duration coupled with a low level of creativity which causes judges to react in this way?

Activity 10.1Go over the materials above (and if need be refer to the notes you made for Chapter 2, Overview). Then write a concise summary of the nature of trade marks. Your answer should include:

u how trade marks are similar to other forms of intellectual property

u how they differ from other forms of intellectual property

u whether they are correctly described as ‘property’

u whether they give rise to a monopoly.


Useful further reading ¢ Schechter, F.I. ‘The Rational Basis for Trade Mark Protection’ (1927) 40 Harv LR 813.

¢ Economides, N. ‘The Economics of Trade Marks’ (1988) 78 TMR 523.

¢ Landes, W. and R. Posner ‘The Economics of Trademark Law’ (1988) 78 TMR 267.

10.3 The functions of trade marks

Essential reading ¢ Bently and Sherman, Chapter 31: ‘Introduction to Passing Off and Trade Marks’

pp.717–21.



¢ Schechter, F.I. ‘The Rational Basis for Trade Mark Protection’ (1927) 40 Harv LR 813.

¢ ELVIS PRESLEY Trade Marks [1999] RPC 567; Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273 (ECJ) and [2003] RPC 696, (CA).

The functions which trade marks fulfil are an important theoretical aspect of intellectual property law. Whether a sign functions as a trade mark (and indeed how it functions) is relevant to passing off, and to the registrability, infringement and revocation of trade marks. The issue of trade mark function can be raised by the Examiner in both essay and problem questions. You should therefore ensure that you have mastered this part of this chapter before you proceed to Chapters 11, 12, 13 and 14. When studying these subsequent chapters, you will often be referred back to the material which follows on trade mark function.

As long ago as 1927, Schechter (in the article listed in the essential reading) argued that the commercial task of a trade mark is ‘to create and retain custom’. The question we must consider is whether this has been recognised in case law and legislation. Until the passing of the Trade Marks Act 1994, the view of United Kingdom judges was that the only function which a trade mark could fulfil was to indicate the commercial origin of goods or services to the consumer. We shall consider whether this still holds true today in the consumer age or whether other aspects of trade marks should be recognised and protected, in accordance with Schechter’s theory.

It is possible to identify four possible functions which trade marks fulfil.


10.3.1 Origin functionThe traditional view of a trade mark is that it tells the consumer about the commercial origin of the goods they are about to buy. A potential difficulty with the origin function was disposed of at an early stage of trade mark law. It doesn’t matter that the consumer doesn’t know the exact trade origin of the goods as long as the consumer recognises the consistency of the (anonymous) source of supply (Powell v Birmingham Vinegar Brewery Co Ltd (1896) 13 RPC 235; McDowell’s Application (1926) 43 RPC 313).

Under the Trade Marks Act 1938, the indication of origin function formed part of the definition of ‘trade mark’ in section 68. This definition affected the ability of the representatives of deceased personalities to obtain registration of their names or images as trade marks, because the personality’s name did not indicate trade origin, rather it simply told the consumer that the goods commemorated that person (ELVIS PRESLEY Trade Marks [1999] RPC 567, CA). This thinking appears to have been continued by the United Kingdom Trade Marks Registry under section 3(1)(b) of the Trade Marks Act 1994, despite a different definition of trade mark in section 1 thereof, discussed below (DIANA, PRINCESS OF WALES Trade Mark [2001] ETMR 254, JANE AUSTEN Trade Mark [2000] RPC 879). It remains to be seen whether this thinking accords with ECJ case law on trade mark function.

The Arsenal decision

A narrow application of the origin function could seriously curtail the scope of the infringement action. The conclusion of Laddie J in Arsenal Football Club v Matthew Reed [2001] RPC 922 illustrates this. He held that the football club could not sue a counterfeiter for trade mark infringement because when a football fan bought a scarf or T-shirt from the defendant, they would not believe that the club had made or even approved the merchandise: instead they simply bought the goods ‘as a badge of allegiance’.

When the case was referred to the ECJ (Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273), a much broader approach to the role of the trade mark was adopted. The Court declared that ‘the essential function of a trade mark was to guarantee the identity of origin of the marked goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin’. The trade mark must offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking responsible for their quality. Consequently, the proprietor had to be protected against competitors wishing to take unfair advantage of the status and reputation of the trade mark. The exclusive right found in the statutory provisions on infringement was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor. In other words, the scope of protection reflects the functions of the trade mark, which in turn reflect the interests of the owner. This thinking was endorsed by the Court of Appeal ([2003] RPC 696) when the case returned to the United Kingdom. ‘Origin function’, accordingly, has a broader meaning under the 1994 Act than it did under previous legislation, taking into account the interests of the consumer in the quality of the goods and the interests of the proprietor in protecting the investment in the trade mark against misappropriation.

We shall see in Chapter 11 how the tort of passing off has traditionally protected the origin function of trade marks. Further, although there are instances in passing off where a broader approach to common law trade marks is taken, there are equally examples where the courts have adopted a more restrictive attitude, stressing that if there is no customer confusion, there can be no passing off (Harrods v Harrodian School [1996] RPC 697). This points the way to common law trade marks having a narrower function than registered trade marks. This has implications for the practice of character merchandising (see Chapter 14).


10.3.2 Product differentiation functionAnother way of expressing what trade marks do can be found in section 1(1) of the 1994 Act. The trade mark enables consumers to choose between competing products, that is, they can ‘distinguish the goods of one undertaking from those of others’. It may be questioned whether the product differentiation function is merely a modern restatement of the origin function. Alternatively, in the light of the comments of the ECJ in Arsenal v Reed, does section 1 (based on Article 2 of the Directive) go beyond indicating commercial source by assisting consumer choice, particularly with reference to the quality of the goods? Whether a trade mark facilitates consumer choice is a test deployed by the ECJ when dealing with the absolute grounds for refusal of registration, which we shall meet in Chapter 12.

10.3.3 Guarantee functionWhen it is said that trade marks fulfil a guarantee function, there is a fine distinction which must be understood. ‘Guarantee’ is not used in the sense found in sales of goods law, but rather indicates that the trade mark operates to reassure the consumer about the consistent quality of the goods.

Guarantee function and passing offSurprisingly, the guarantee function has been recognised by the House of Lords in the extended form of the tort of passing off (see Chapter 11). In Spalding v Gamage (1915) 32 RPC 273, it was held that the claimant’s business had been harmed by the defendant’s having sold defective versions of the claimant’s footballs as ‘A1’ quality. More recently, in a case involving supermarket ‘own brand lookalikes’ (United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513) Robert Walker J held that the adoption by the defendant supermarket of the ‘get up’ of chocolate biscuits which imitated that of the claimant’s famous PENGUIN biscuits would lead shoppers to think that the biscuits, although cheaper, had been made for Asda by the claimants. They would expect the same quality.

Guarantee function and parallel importsThe guarantee function has also been recognised by the ECJ when dealing with cases on the parallel importation of trade-marked goods. It was a key factor in Case C-10/89 SA CNL-Sucal NV v Hag GF AG [1990] ECR I-3711 (‘Hag II’). Here there were two versions of the famous CAFFEE HAG decaffeinated coffee on the market, one made by the original trade mark owner in Germany, the other by a company which had acquired the trade mark registration in Belgium after the Second World War. The ECJ accepted that customers would be misled by the different quality and taste of the rival products, such that the original owner of the brand could sue the Belgium owner for trade mark infringement. The fact that historically the two trade mark registrations in Belgium and Germany had been owned by the same enterprise was irrelevant.

Likewise, in Case C-143/00 Boehringer Ingelheim v Swingward Ltd and Dowelhurst [2002] ECR I-3759 the ECJ took into account the perception of consumers when buying branded pharmaceuticals which had been the subject of parallel imports. It said that consumers rely on the trade mark as a means of ensuring that (legitimate) goods have not been interfered with by those who import them from another Member State. The Court added to this in Case C-228/03 The Gillette Company & Gillette Group Finland Oy v LA-Laboratories Oy [2005] ECR I-2337: an undertaking must be in a position to keep its customers by virtue of the quality of its products and services which is only possible if there are distinctive marks which enable customers to identify them.

ArsenalagainWe can also see how the role of the trade mark in guaranteeing quality is referred to in the ruling in the Arsenal case above. The guarantee of quality is said, by the ECJ, to be an aspect of the trade mark in enabling consumers to choose between competing brands. The recognition of the guarantee function raises the question whether, just as in medieval times, modern trade marks have an important role to play in consumer protection.


10.3.4 Advertising functionThe protection of the advertising function is at the heart of Schechter’s argument. He posits that if a trade mark is a vehicle for creating goodwill, its ‘selling power’ should be protected against ‘free riding’ by those who wish to take advantage of its reputation. Again, there are echoes of this in Arsenal.

Advertising function and dilution

It can be argued that, in addition to the ruling in Arsenal, Schechter’s theory is now part of United Kingdom law in another respect. Taking advantage of two optional provisions in the Trade Marks Directive, the United Kingdom enacted sections 5(3) and 10(3) of the 1994 Act. These two sub-sections confer protection on trade marks which have a reputation, enabling their owners to oppose the registration of or object to the use of identical or similar marks which seek to take unfair advantage of or cause detriment to the repute of the earlier mark. Some writers have argued that this protection introduces the doctrine of dilution into United Kingdom law (though equally there are others who disagree with this conclusion). Dilution (as a form of harm to a trade mark) is a well-established concept in US and Benelux trade mark law. Under EU law, the doctrine holds that a mark which has a reputation can be harmed in three ways. First, the mark can be ‘watered down’ by use on non-competing goods so that over a period of time it loses its distinctive quality. To paraphrase Schechter, if the use of ROLLS ROYCE on lipsticks, hamburgers or steam shovels is not prevented, then the ROLLS ROYCE brand for cars will be weakened. The second form of harm is that a mark with a reputation can be tarnished if it is used on non-competing goods which have an unsavoury or unwholesome connotation. The best known example of tarnishing as a form of dilution is the leading Benelux Court of Justice decision of CLAERYN/KLAREIN (1976) 7 IIC 420, where the owner of CLAERYN Dutch gin was able to prevent Colgate using KLAREIN for a toilet cleaning liquid. Both marks had an identical pronunciation in the Dutch language and consumers would not wish to be reminded of a cleaning agent while drinking a glass of high quality gin. Last, a competitor may ‘free ride’ on a mark with a reputation by using an identical or similar mark as a means of gaining quick access to the market.

No confusion needed United Kingdom courts were initially unreceptive to the nature of the protection found in sections 5(3) and 10(3). In Baywatch Production Co Inc v The Home Video Channel [1997] FSR 2, it was held that proof of likelihood of confusion was required. The correct view is that established by the ECJ in Case C-251/95 Sabel BV v Puma AG [1997] ECR I-6191 and Case C-487/07 L’Oréal SA v Bellure NV, 18 June 2009. Confusion is not required, as these two provisions pursue a different objective, namely that of protecting marks with a reputation. Since then, the ECJ has broadened the scope of protection accorded to marks with a reputation by holding that the two provisions are not confined to the use of the identical or similar mark on dissimilar goods, but apply equally to use of a competing mark on similar goods (Case C-292/00 Davidoff & Cie SA and Zino Davidoff v Gofkid Ltd [2003] ECR I-389 and Case C-408/01 Adidas-Salomon AG & Adidas Benelux BV v Fitnessworld Trading Ltd [2003] ECR I-12537).

In according protection to marks with a reputation, the Trade Marks Directive and the Trade Marks Act 1994 have gone far beyond preventing consumer confusion. Instead, the trade mark is treated as a valuable asset, in which its owner has made a major investment. The trade mark is therefore to be protected against those who wish to misappropriate its selling power.

Activity 10.2Go over the material on the functions which trade marks perform in the modern consumer economy. Then answer the following questions.

1. What is meant by the origin function? Does it matter that the consumer does not know the precise name of the undertaking which makes their favourite brand of instant coffee? Are there any problems caused by treating the origin function as the only function which trade marks can fulfil?


2. How does section 1 of the Trade Marks Act 1994 (Article 2 of the Directive) define the function of a trade mark? Is this the same as the origin function?

3. What is meant when it is said that a trade mark acts ‘as a guarantee’? Use case law to illustrate your answer.

4. What is meant by the advertising function of trade marks? Which provisions of the Trade Marks Act 1994 reflect this function? What is the purpose of these provisions?


10.4 The significance of the EU Trade Marks Directive and the Community Trade Mark Regulation

Essential reading ¢ Bainbridge, Chapter 19: ‘Trade Marks - Introduction and Background’ pp.661−64.

¢ Bently and Sherman, Chapter 31: ‘Introduction to Passing Off and Trade Marks’ pp.721−25.



As part of the task of achieving the internal market (where the boundaries between the Member States are ignored and the EU is treated as a single territory), the EU Commission adopted a ‘twin track’ approach to the law of trade marks. On the one hand, the domestic laws of Member States needed to be standardised and on the other, there should be an EU system of registration.

In consequence, the EU enacted the First Trade Mark Directive of 21 December 1988 (Directive 89/104/EEC, OJ [1989] L 40/1) on the Approximation of National Trade Marks Laws (to give it its full title – hereafter referred to as ‘the Trade Marks Directive’) (now codified as Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 [2008] OJ L 299/25)and Council Regulation (EC) 40/94 of 20 December 1994, OJ [1994] L 11/1, on the Community Trade Mark (hereafter ‘the EU Trade Mark Regulation’) (now codified as Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark [2009] OJ L 78/1). The wording of the provisions on registrability, infringement and revocation in these two measures is virtually identical. Case law interpreting these provisions is therefore interchangeable.

The Directive was intended to bring into line the national laws of the Member States by prescribing:

u what can and cannot be a registered trade mark

u the scope of the trade mark right

u the obligation to use a trade mark in order to maintain it

u the grounds for revocation

u how a trade mark can be licensed.

It leaves entirely to Member States the procedural details of applying for or revoking a trade mark or bringing infringement proceedings. The Directive is drafted in language different from that found in previous United Kingdom legislation. In keeping with the civil law tradition, it is written in terms of broad principle rather than specific detail.

10.4.1 Impact of the Directive on the Trade Marks Act 1994The Directive has had a major influence on the content of the Trade Marks Act 1994. In comparison with the Trade Marks Act 1938, and as a consequence of the Directive, the 1994 Act lowers the test for registrability of marks and broadens the scope of the infringement action. At the same time it makes it easier for third parties to challenge the validity of registered marks.


Case law of the ECJ concerning the implementation of EU Directives into national law has stressed that directives must be used as an aid to the interpretation of any national legislation covering the same area, whether such legislation was made before or after the Directive was passed. Further, any national court unsure as to the interpretation of national law based on a Directive has the discretion to refer the case to the Court of Justice for a preliminary ruling under Article 267 of the Treaty on the Functioning of the European Union (TFEU) (formerly Article 234 EC), and a court of last resort must refer such a matter.

When asked to interpret a Directive, the ECJ, in keeping with the civil law tradition, will adopt the teleological style of interpretation, that is, it will consider the legislation in the light of its objectives, making use of working papers and discussions which preceded its enactment. Accordingly, when you study the preliminary rulings of the ECJ, you will find that it often makes reference to the objectives of the Directive. These can be found in the Directive’s Recitals (a series of clauses which form the Preamble to the Directive, each beginning with the word ‘whereas’). These are set out in your statute book. Read them now.

Consequently, the meaning of the key provisions in the 1994 Act can no longer be conclusively determined by the Trade Marks Registry, the Patents Court, the Court of Appeal or the Supreme Court. The only judicial body which has the authority to give a definitive interpretation of the Directive and any national legislation based on it is the ECJ.

For the above reasons, you must keep constantly in mind the European dimension to the Trade Marks Act 1994.

The Community Trade Mark Regulation led to the establishment of the Office for Harmonization in the Internal Market (Trade Marks and Designs) (‘OHIM’). It is located in Alicante, Spain and deals with applications to register trade marks which are effective throughout the whole of the EU (the same body now has responsibility for the registration of Community designs). EU registered trade marks exist in parallel to national registrations. Some of your recommended textbooks do discuss EU trade marks in some detail, but they are beyond the scope of your syllabus.

Appeals from decisions of OHIM relating to registrability of trade marks (whether on absolute or relative grounds) or on invalidity go to the General Court (formerly known as the Court of First Instance). Further appeals on points of law may be made to the ECJ itself. The consequence is that the judicial interpretation of the Trade Marks Act 1994 by United Kingdom courts and the United Kingdom Intellectual Property Office (UKIPO) has to take account of the rulings of the ECJ in interpreting the Directive, and of OHIM, the General Court and the ECJ in applying the Regulation. As stated above, these two strands of case law are interchangeable.

Activity 10.3Go over the material on the effect of European legislation and case law on United Kingdom trade mark law. Then answer the following questions:

1. What legislative steps were adopted by the EU Commission as part of its plan to create the internal market?

2. What aspects of trade mark law does the EU Trade Marks Directive seek to harmonise?

3. Which judicial body is the only tribunal which can give an authoritative interpretation on the meaning of the Trade Marks Directive and the Community Trade Mark Regulation?




u explain the historical factors which have influenced present-day United Kingdom trade mark law

u compare and contrast the nature of the trade mark right with other forms of intellectual property protection

u discuss the various commercial functions performed by trade marks and whether these are recognised in legislation and case law

u explain the way in which EU law influences the law of trade marks in the United Kingdom

u list the functions which trade marks perform.

Sample examination questionsThe topics covered in this chapter, though vital for an understanding of trade mark law, are not examinable as such.


Reflect and review








Need to study again

I can explain the historical factors which have influenced present-day United Kingdom trade mark law.

¢

¢

¢

I can compare and contrast the nature of the trade mark right with other forms of intellectual property protection.

¢

¢

¢

I can discuss the various commercial functions performed by trade marks and whether these are recognised in legislation and case law.

¢

¢

¢

I can explain the way in which EU law influences the law of trade marks in the United Kingdom.

¢ ¢ ¢

I can list the functions which trade marks perform.

¢ ¢ ¢


Must revise

Revision done

10.1 The history of trade marks and trade mark law ¢ ¢

10.2 The nature of trade marks ¢ ¢

10.3 The functions of trade marks ¢ ¢

10.4 The significance of the EU Trade Marks Directive and the Community Trade Mark Regulation

¢ ¢

Contents

Introduction 154

11 1 Thenatureofpassingoff 155

11 2 Theelementsofpassingoff 155

11 3 Defencestopassingoff 160

11 4 Illustrationsofthetort 161

11 5 Theforeignclaimantandwell-knownmarks 164

11 6 Thefutureofpassingoff 166


11 Passing off


Introduction

This chapter will endeavour to explain the tort of passing off, which is the common law means of protecting trade marks. It is dealt with at this stage of your studies to help you appreciate the importance of registering trade marks. Your knowledge of passing off will also help you to understand the material on the acquisition and infringement of registered marks in the chapters which follow.

There is no obligation to register a trade mark. Indeed, in some instances (far fewer since 1994) a chosen brand name may not be capable of registration. Passing off therefore gives a trader an opportunity to acquire protection through use of a brand name, logo or trading name, or indeed any symbol which has been used in the course of trade to indicate the origin of goods in such a way that it has achieved public recognition.

The law of passing off is entirely judge-made. This means that, first, there is an enormous body of case law to be digested and, second, many of the cases are contradictory. As a consequence you will find that it is almost impossible to construct a rational theory for passing off. In many instances, its function appears to be that of protecting consumers against origin confusion (see the discussion of trade mark function in Chapter 10), but there are also cases where the tort has been used to protect a trader against unfair competition or, at the very least, against misappropriation (refer to your notes on Chapter 2 on this last point).

One of the reasons why the tort of passing off appears so contradictory is that success or failure often depends on the quality of evidence which is available to support the claimant’s case. The onus is on the claimant to establish each one of the interdependent elements of the tort (explained below). In consequence, what appears to be a straightforward case may fail simply because of lack of evidence or even poor preparation by the claimant’s lawyers.

Despite the lack of clarity in the case law, the basic ingredients of passing off are now well established, and it is upon these which you should concentrate.


u explain, using relevant authority, the factors which must be proved by a claimant in order to succeed in an action for passing off

u describe the various ways in which passing off may be used to protect trade marks and other symbols used in the course of trade

u discuss the ways in which passing off might develop in the future

u list the key elements in the definition of passing off.

Intellectual property 11 Passing off page 155

11.1 The nature of passing off

Essential reading ¢ Bainbridge, Chapter 23: ‘Passing Off’ pp.809−11.

¢ Bently and Sherman, Chapter 32 ‘Passing Off’ pp.726−28.

¢ Cornish, Chapter 17: ‘Common Law Liability’ paras 17-01 to 17-04.

¢ Norman, Chapter 13: ‘Passing Off’ section 13.1.

¢ Chapter 2 of this subject guide (on the justifications for intellectual property and on the lack of protection for unfair competition).

¢ Cases: Erven Warnink BV v Townend & Sons [1979] AC 731; Cadbury-Schweppes v Pub Squash Co. [1981] RPC 429 (read only Lord Scarman at pp.486–97); Arsenal Football Club v Matthew Reed [2003] RPC 696.

Passing off has been described as a ‘protean’ tort (that is, one which keeps changing its shape). As stated in the introduction to this chapter, it is difficult to construct any rational theory of passing off. The case law is full of inconsistencies and is difficult to reconcile. One particular debate (which we will return to at the end of this chapter) is about the proper role of passing off. Should it be confined to ‘origin confusion’, so that there is no liability if customers are not misled by the defendant? Or should it develop into a means of protecting a trader against those who wish to misappropriate his/her business investment?

You will find that, in practice, the passing off action is used in two ways. First, it is the only means available to protect unregistered trade marks and other symbols used in the course of trade. Second, it is usually pleaded in the alternative to a claim for trade mark infringement and is particularly useful if the registered mark is at risk from a counterclaim for revocation or invalidity (see further Chapter 13 and as an illustration of the need to use passing off as a ‘back up’ to a claim for infringement of a registered trade mark, see United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513). As a cause of action, however, passing off is much more onerous than a claim for trade mark infringement because the claimant has to satisfy each and every element of the tort. Success or failure will be dependent on the availability of suitable evidence to support the claimant’s case.

Activity 11.1Go over the notes you made about the speeches of Lord Diplock in Warnink v Townend and Lord Scarman in Pub Squash when you studied Chapter 2. Then read the judgment of Aldous LJ in Arsenal v Reed. Do you think that Aldous LJ was agreeing with Lord Diplock when he said that we should think of passing off as offering protection against unfair competition?

11.2 The elements of passing off


¢ Bently and Sherman, Chapter 32: ‘Passing Off’ pp.726−28.

¢ Cornish, Chapter 17: ‘Common Law Liability’ paras 17-05 and 17-06.

¢ Norman, Chapter 13: ‘Passing Off’ section 13.2.1.

¢ Cases: Erven Warnink BV v Townend & Sons [1979] AC 731; Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873.

It is generally accepted that there are two leading definitions (or rather, descriptions) of passing off. The one which is most usually referred to in the cases is that given by Lord Oliver in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 (the JIF LEMON case). Lord Oliver stated that: first, a trader must establish that s/he has a goodwill


or reputation attached to the goods or services which s/he supplies; secondly, the trader must demonstrate that the defendant has made a misrepresentation (whether intentional or not) that had led or is likely to lead the public to believe that the goods or services offered by the defendant are the goods or services of the claimant; and last, the trader must demonstrate that s/he has suffered or is likely to suffer damage by reason of the erroneous belief caused by the defendant’s misrepresentation. This definition is often called the ‘classic trinity’ of passing off. You should note that the three elements are interdependent. We shall use this definition as the basis of our examination of passing off, and each element is considered separately below.

However, you will come across another so-called ‘definition’ of passing off, that given by Lord Diplock in Erven Warnink BV v Townend & Sons [1979] AC 731. His five-point list is that the claimant must establish that there has been:

u a misrepresentation

u made by a trader in the course of trade

u to the defendant’s prospective customers or ultimate consumers

u which is calculated to injure the business of another

u and which causes actual damage to the claimant’s goodwill or is likely to do so.

Lord Diplock’s statement is concerned only with what conduct by a defendant will amount to passing off, and appears not to consider what a claimant has to prove as regards the existence of goodwill in the brand name and the likely damage to the claimant’s business. These issues are considered by the other leading speech in Erven Warnink, that of Lord Russell. As the other members of the House of Lords agreed with both speeches, it is arguable that put together, they form a composite (if lengthy) definition of the tort. You should also note Lord Diplock’s rather unhelpful warning, which is to the effect that just because all the elements listed by him are satisfied does not mean that there has been passing off (which rather begs the question whether this is indeed a comprehensive description of the tort).

Activity 11.2 Read the speeches of Lord Oliver in JIF LEMON and Lord Diplock in Erven Warnink. Then write a concise summary setting out their respective definitions of passing off.


11.2.1 Reputation (goodwill)

Essential reading ¢ Bainbridge, Chapter 23: ‘Passing Off‘ pp.814−29.


¢ Cornish’ Chapter 17: ‘Common Law Liability’ paras 17-07 to 17-15.


¢ Case: Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury Ltd [1999] RPC 826.

It is up to the claimant to establish that there is goodwill or reputation in the trade symbol in question; in other words, that the brand name or sign has become factually distinctive of his/ her business (referred to sometimes as acquiring ‘secondary meaning’). It doesn’t matter that the brand name cannot be registered as a trade mark (e.g. because it is descriptive of the goods as in Reddaway v Banham [1896] AC 199 – ‘camel hair belting’) as long as there is proof of public recognition. However, the brand name must have been used to indicate commercial origin, so that it is not sufficient if the name has been used to designate a particular model or type of product (see Burberrys v Cording (1909) 26 RPC 693 where the name in question − ‘Slip On’ − referred to the type of raincoat sold by the claimants).


It should not be assumed that lengthy use of the brand name has to be proved in every case, provided the other, interdependent elements of passing off are clearly established. In Stannard v Reay [1967] RPC 589, three weeks’ use of the name ‘Mr Chippy’ for a mobile fish’n’chip van sufficed. Despite such a short period of use, the claimant was able to stop a rival operating his van under the same name, although the case was no doubt assisted by the fact that the claimant had been operating in a clearly defined geographical area (the Isle of Wight, off the south coast of England) and had suffered a clear drop in sales (i.e. damage) as soon as the defendant began trading because his customers bought their fish’n’chips from a different source.

Simultaneous or shared reputation

Normally, the reputation or goodwill must be exclusive to the claimant. However, it may be possible for two undertakings to acquire a reputation simultaneously, so that neither can stop the other from using the name in question (see Anheuser-Busch Inc v Budejovicky Budvar NP [2000] RPC 906, CA, where BUDWEISER was the trade mark of two rival companies, one American and one Czech). It may also be possible (though unusual) for two undertakings to acquire their reputation from a common source (see Sir Robert McAlpine Ltd v Alfred McAlpine plc [2004] RPC 711 where the two companies were originally part of the same family business which had been divided along geographical lines). In cases such as McAlpine, each undertaking has to ensure that they do not cause customers to mistake one firm for the other. In other words, one co-owner must not erode the exclusivity of the other’s name.

It is also possible to have shared reputation or goodwill in a product possessing special qualities, in which case any one of the undertakings which shares this reputation can sue a third party for passing off. The cases on shared reputation all involve drinks or foodstuffs which come from a particular geographical region (so that it is the locality which imparts the special quality to the product) or which result from a special recipe. The cases so far decided involve: Champagne (Bollinger v Costa Brava Wine Co [1961] RPC 116 and Bulmer v Bollinger [1978] RPC 79); sherry (Vine Products v MacKenzie [1969] RPC 1); Scotch whisky (Walker v Ost [1970] RPC 489); advocaat (Erven Warnink v Townend & Sons Ltd [1979] AC 731); and Swiss chocolate (Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury Ltd [1999] RPC 826). Most recently, in Diageo North America Inc v Intercontinental Brands (ICB) Ltd [2010] EWHC 17 (Ch), Arnold J held that this category of passing off was not limited to products perceived as being of a superior quality: to hold otherwise would deny protection to the claimant’s goodwill. Here, selling an alcoholic drink under the name VODKAT without clear labelling to indicate that it was not vodka misled the public, particularly as the get-up of the claimant’s leading brand of vodka (SMIRNOFF) had been copied.

Reputation must be attached to a business

Reputation is not something, however, which exists in isolation. It cannot subsist by itself, but must be attached to a business. Reputation therefore depends on the claimant being a trader (rather than a private individual) and having a business interest to protect. Further, the claimant’s goodwill or reputation will be limited, both in time and geographically. Goodwill may survive after a business ceases to trade, but only for a limited period. How long goodwill can survive after the claimant ceases to trade is a question of fact in each case (Ad-Lib Club v Granville [1971] FSR 1). If the claimant has no intention of reopening the business, then that will point to the conclusion that goodwill has entirely disappeared (contrast the decision of the Privy Council in Star Industrial Co v Yap Kwee Kor [1976] FSR 217 with the earlier decision in the Ad-Lib Club case on this point). Nevertheless, it is possible for goodwill to continue for a considerable period of time (40 years) even though there has been limited use of the claimant’s mark. In Jules Rimet Cup Ltd v The Football Association Ltd [2008] FSR 254 the court held that enough goodwill in the cartoon character ‘World Cup Willie’ survived from its use as a mascot for the 1966 World Cup for the FA to be able to sue for passing off in 2005.

The geographical limitations on goodwill are considered below in section 11.5: ‘The foreign claimant and well-known marks’.

Champagne originates in a region of Northern France; sherry from Southern Spain; and advocaat is an egg-flavoured drink traditionally made the Netherlands.


Activity 11.3Read the Court of Appeal decision in Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury Ltd. What does the court say about shared reputation? Are there any difficulties raised by the facts of the case?

11.2.2 Misrepresentation


¢ Bently and Sherman, Chapter 33: ‘Misrepresentation’ pp.829−37.



¢ Cases: Spalding v Gamage (1915) 32 RPC 273; United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513; Harrods v Harrodian School [1996] RPC 697.

Useful further reading: ¢ Carty, H. ‘Dilution and Passing Off: Cause for Concern’ (1996) 112 LQR 632.

The defendant’s misrepresentation can be committed in a variety of ways: it can be express or implied, by words or conduct, or it can be fraudulent or innocent (see Lord Parker in Spalding v Gamage (1915) 32 RPC 273 at 284). What matters, though, is the effect of the misrepresentation on the minds of the claimant’s customers. It must lead them to make an association with the claimant or make them think that this was ‘something for which the [claimant] was responsible’ (see the remarks of Goff and Buckley LJJ in Bulmer v Bollinger). So, for example, in Associated Newspapers v Insert Media [1991] FSR 380, the Court of Appeal held that passing off had been made out where the defendant inserted advertising leaflets inside magazines published by the claimants, as the public would think that the claimants had approved the material. In United Biscuits (UK) Ltd v Asda Stores Ltd, it was held that where the defendants sold ‘Puffin’ chocolate biscuits which looked like the famous ‘Penguin’ biscuits made by the claimants, customers would think that the supermarket had had the biscuits made for them by the claimants.

Lord Diplock’s ‘definition’ in Erven Warnink states that the misrepresentation must be calculated to deceive. ‘Calculated’ simply means that the misrepresentation must be likely to cause confusion (that is, in the normal civil law sense of ‘on the balance of probabilities’). However, there are two particular problems with likelihood of confusion.

u First, what does the claimant have to establish in order to satisfy the court that there is a likelihood of confusion? United Kingdom courts are highly sceptical about the value of survey evidence (see Dalgety Spiller Foods v Food Brokers [1994] FSR 505) and much prefer customers who are prepared to give evidence in person that they have been misled by the defendant (see Neutrogena v Golden Ltd t/a Laboratoires Garnier [1996] RPC 473 where the claimant’s solicitor emailed her staff to see how many had been confused by the defendant’s television advert).

u Second, it should be asked how intelligent is the deceived consumer? It is sometimes said (inaccurately) that the test is that of the ‘moron in a hurry’. Reference to the case where the phrase is found (Morning Star Co-operative Society Ltd v Express Newspapers Ltd [1979] FSR 113) reveals that what the court said about the conduct of the defendants in naming their new newspaper The Daily Star was that ‘even the moron in a hurry’ would not confuse the name with that of the claimant’s newspaper. In any case, in the law of registered trade marks, the notional consumer is deemed to be reasonably well informed, reasonably observant and circumspect (see the comments of the ECJ in Case C-342/97 Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [1999] ECR I-3819 discussed in Chapter 12 below) and there is no reason to doubt that a similar standard should be applied in passing off.

A puffin is a small sea-bird which lives on rocky coasts and islands around the United Kingdom. The well-known publisher Penguin Books also developed a ‘junior’ brand called Puffin which catered for younger readers.


However, one of the major limitations on the potential development of passing off concerns the effect of the misrepresentation on the mind of the consumer. If the consumer is not confused about the source of the defendant’s product, there can be no liability for passing off. This point is illustrated by two key cases, namely Hodgkinson & Corby v Wards Mobility Service [1995] FSR 169 and Harrods v Harrodian School [1996] RPC 697. In Hodgkinson & Corby, the claimants alleged that by reproducing the shape of their cushions (used by healthcare professionals when nursing the chronically ill), the defendants had committed passing off. It was held that upon seeing the cushion, the relevant consumer would not have been confused into thinking that the cushions were made by the claimants. In the Harrods case, the defendants had set up a preparatory school on the site of a sports club previously owned by the famous department store. The Court of Appeal (by a majority) held that although customers might ‘call to mind’ the name of the claimant when confronted by the name of the school, they would not be misled into thinking that the Harrods store had endorsed or approved the school.

Activity 11.4Read the decision in the Harrods case listed in your essential reading. Is the attitude of the Court of Appeal in that case consistent with the thinking of the same court in the later decision of Arsenal v Reed?

11.2.3 Damage

Essential reading ¢ Bainbridge, Chapter 23: ‘Passing Off‘ pp.843−47.

¢ Bently and Sherman, Chapter 34: ‘Damage’ pp.768−78.

¢ Cornish, Chapter 17: ‘Common Law Liability‘ para 17-29.


¢ Case: Taittinger v Allbev [1993] 2 CMLR 741.

Useful further reading: ¢ Carty, H. ‘Heads of Damage in Passing Off’ [1996] EIPR 487.

In the third element of the ‘classic trinity’, the claimant must establish that there has been or will be damage. This is damage to the goodwill of the claimant’s business (‘goodwill’ being defined as ‘the attractive force which brings in custom’ and ‘that which distinguishes an old business from a new’ per Lord McNaghten in CIR v Muller & Co’s Margarine Ltd [1901] AC 217). Such damage must be more than minimal, but need not be actual: a threat of damage will suffice provided all the other elements of passing off are established.

The usual form of damage alleged by the claimant will be loss of sales, because customers have been diverted by the defendant’s misrepresentation (see as an example Stannard v Reay, above). However, other forms of damage have been recognised, not all of which accord with the role of passing off in preventing origin confusion. Thus in Rolls Royce Motors v Dodd [1981] FSR 519, it was recognised that the claimants had suffered damage to the image of their product (luxury cars) by the defendant’s having affixed the Rolls Royce badge to his home-built racing car powered by an aeroplane engine (Megarry J overlooked the point that the defendant wasn’t actually trading in cars). In Taittinger v Allbev [1993] 2 CMLR 741, the Court of Appeal recognised that the harm lay in the dilution of the name champagne were it to be used in relation to a fruit-flavoured drink, even though there was little evidence of consumer confusion (refer again to Chapter 10 if you are unsure about the nature of dilution as a form of harm to a trade mark). Other forms of damage include those in Lego System AB v Lego M Lemelstrich [1983] FSR 155 (loss of licensing opportunity), Irvine v Talksport [2002] 2 All ER 414 (loss of merchandising potential) (we considered Irvine in Chapter 2) and Sir Robert McAlpine Ltd v Alfred McAlpine plc [2004] RPC 711 (‘elbowing out’ the rightful owner of the business name).


Activity 11.5Read the decision in Taittinger v Allbev listed in your essential reading. Can the views of the Court of Appeal be reconciled with the orthodox view of damage as an ingredient in passing off?

11.3 Defences to passing off

Essential reading ¢ Bainbridge, Chapter 23: ‘Passing Off’ pp.835−37, 852−53.




When faced with an action for passing off, the main defence will normally be that the claimant has failed to establish the elements of the tort, that is, that one or more of the ‘classic trinity’ is missing. Thus the claimant may have failed to establish reputation (as in Cadbury v Ulmer [1988] FSR 385 where the claimants did not convince the court that the shape of their chocolate bar had acquired secondary meaning, i.e. factual distinctiveness). Alternatively, the claimant may not have established consumer confusion (see the Harrods case discussed above). Lastly, the claimant may have failed to show damage to goodwill. As mentioned above, failure to establish one or more of the elements of passing off may simply be a matter of lack of convincing evidence.

One defence which is sometimes said to exist is that of ‘no common field of activity’, that is, that the claimant and defendant are not in the same line of business. You should note that this requirement is not mentioned in either of the judicial ‘definitions’ of passing off given above and so it may be doubted whether it actually exists. The best explanation of this so-called ‘defence’ is to be found in Annabel’s (Berkeley Square) v Schock [1972] RPC 838, where the court pointed out that it will be harder for the claimant to establish a likelihood of confusion if the parties are not in direct competition (see also the remarks of the Court of Appeal in Harrods v Harrodian School [1996] RPC 697). Nevertheless, the defence has been raised with some success in cases involving character or personality merchandising and will be discussed further in Chapter 14.

Reminder of learning outcomeBy this stage you should be able to:

u explain, using relevant authority, the factors which must be proved by a claimant in order to succeed in an action for passing off.

Activity 11.6Write a concise summary of the elements which go to make up Lord Oliver’s ‘classic trinity’, illustrating your answer with appropriate authority. Indicate where there are difficulties or uncertainty in the case law.



11.4 Illustrations of the tort





The following is merely a list of examples of how the tort may be committed. It is intended to help you to organise into some sort of coherent groupings some of the many cases on passing off which you will encounter in your textbooks. These groups are illustrations of the range of misrepresentations which could be made by the defendant. The list has no legal significance and is simply here for your convenience.

One point you will have come across in your reading is whether there is a difference between ‘classical’ and ‘extended’ passing off. Assuming for present purposes that such a division exists (and there is some doubt on the matter), ‘classical’ passing off arises in cases where there is origin confusion and accordingly loss of customers, whereas ‘extended’ passing off involves those cases where there is a misrepresentation as to the quality of the product or else the damage suffered goes beyond origin confusion.

11.4.1 ‘Classical’ passing offThe following may be considered as examples of ‘classical’ passing off.

Use of the claimant’s name

The first group of cases have as a common denominator where the defendant makes use of the claimant’s name. This can be an individual’s personal name, including someone’s nickname (Biba Group Ltd v Biba Boutique [1980] RPC 413) or a company name (Harrods Ltd v R Harrod Ltd (1924) 41 RPC 74). Where the claimant and defendant both have the same family name, then a heavy burden is placed on the defendant to ensure that there is no confusion: Boswell-Wilkie Circus v Brian Boswell Circus [1986] FSR 479. An illustration of this harsh rule can be seen in I N Newman Ltd v Adlem [2005] EWCA Civ 741. Here, the defendant had sold his business as a funeral director to the claimant’s predecessor in business, but then set up a new business using his own name, which he also registered as a trade mark. Overturning the first instance decision, a majority of the Court of Appeal held that the goodwill of the original business had been transferred to the claimant. Accordingly, by trading in his own name the defendant had failed to do enough to ensure that customers would not be misled.

You should note that the ‘own name’ defence in passing off is much stricter than the equivalent defence in trade mark infringement (see Chapter 13), such that there appears to be no decided case where the defence has succeeded: Reed Executive plc v Reed Business Information Ltd [2004] RPC 767.

Passing off also covers the use by the defendant of the claimant’s trading name (see Brestian v Try [1958] RPC 161 where the protected name was ‘Charles of London’ for a hairdressing business). However, where the trading name is descriptive, it will be relatively easy for the defendant to escape liability by making minor changes to the name in order to differentiate its own business: Office Cleaning Services Ltd v Westminster Window & General Cleaners Ltd (1946) 63 RPC 39. Lastly, this group of cases appears to have been extended by the decision in Law Society v Griffiths [1995] RPC 16, where protection was accorded to the use of a specially chosen accident helpline telephone number. (Note that the misrepresentation in this case arose due to the defendant’s silence in not correcting customers’ assumptions that they had contacted the claimant.)


Use of the claimant’s trade mark

The next group of cases falling within ‘classical’ passing off has, as the unifying factor, the use of the claimant’s trade mark. As noted already, it doesn’t matter if the trade mark is descriptive of the product as long as it has acquired a ‘secondary meaning’, that is, it has become factually distinctive of the claimant’s products: Reddaway v Banham [1896] AC 199. Likewise, protection may be accorded to geographical names, as in Powell v Birmingham Vinegar Brewery Co (1896) 13 RPC 235, HL, where the protected trade mark was ‘Yorkshire relish’ or as in Montgomery v Thompson [1891] AC 217 (‘Stone ale’), as long as there is evidence that the name has achieved factual distinctiveness. The potential breadth of passing off should be noted here, in that the claimant of a very strong trade mark can obtain protection against use on dissimilar goods (this should be compared with the provisions to be found in sections 5(3) and 10(3) of the Trade Marks Act 1994, discussed in Chapters 12 and 13 respectively). Examples of this type of protection against dilution include Eastman Photographic Materials Co v John Griffiths Cycle Co (1898) 15 RPC 105 (where the use of KODAK, already well-known for cameras, was enjoined in respect of bicycles) and Lego System AB v Lego M Lemelstrich [1983] FSR 155 (where the owner of LEGO for toys was able to prevent its use on plastic irrigation equipment).

‘Get up’ of the claimant’s goods

The last major group of cases involves the use by the defendant of the get up of the claimant’s goods. The term ‘get up’ should be understood to include the shape of packaging and of containers, the use of colour schemes and the layout of and typeface used on labels, items which all help consumers to identify the commercial origin of goods in addition to any brand name. Collectively, these matters are sometimes referred to as ‘trade dress’. Examples of such ‘trade dress’ include:

u William Edge & Sons v Niccolls [1911] AC 693 (the packaging of ‘dolly blue’ whitening for laundry which was sold in little muslin bags with a stick attached, so that it had the appearance of a doll)

u Combe International v Scholl (UK) Ltd [1980] RPC 1 (the packaging of ‘odour-eater’ insoles)

u United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513 (chocolate biscuit wrappers)

u John Haig v Forth Blending (1953) 70 RPC 259 (the shape of the dimple whisky bottle)

u Reckitt & Colman v Borden Inc [1990] 1 All ER 873 (the appearance of a plastic lemon for lemon juice).

As we shall see in Chapter 12, consumers do not always perceive colours and shapes as trade marks, so a greater amount of factual distinctiveness will have to be proved by the claimant in order to succeed. As an example, in relation to colour schemes, the ‘garish’ colours of purple and green pharmaceutical capsules were protected in Hoffmann-La Roche v DDSA [1972] RPC 1 but the ‘very ordinary’ pale blue colour of tablets in Roche Products v Berk Pharmaceuticals [1973] RPC 473 was not. This lack of ‘secondary meaning’ was, of course, fatal to the claim for passing off in Cadbury-Schweppes v Pub Squash Co.

You may find that some of the cases on ‘get up’ may need re-evaluating in the light of developments relating to registered trade marks. So, for example, the claims for passing off failed in Cadbury v Ulmer [1988] FSR 385, because the court concluded that the appearance of the chocolate bar did not have ‘trade mark significance’ and in Bostick v Sellotape [1994] RPC 556 protection was denied because the colour applied to sticky plastic (‘Blu-Tack’) was not visible at point of sale. Both of these cases should now be treated with caution in view of the comments of the ECJ and CA in the case of Arsenal v Reed about trade mark use (refer to the discussion in Chapter 10, and see further Chapter 13 on the scope of trade mark infringement). The importance of this category of ‘classical’ passing off lies in the fact that it is the one means available to protect brand owners against competition by supermarket ‘own-brand lookalikes’: see United Biscuits (UK) Ltd v Asda Stores Ltd (the get up of Penguin biscuits confusingly imitated by the defendant’s packaging of their Puffin biscuits).


Activity 11.7Go over the material on ‘classical’ passing off, then write a concise summary of the types of misrepresentation which the defendant may commit, giving examples from decided cases. Are there any decisions which ought to be re-evaluated in the light of recent developments?


11.4.2 ‘Extended’ passing offThe following may be considered as examples of ‘extended’ passing off.

False suggestion of superior quality

The first group of cases in this category all involve the defendant making a false suggestion of superior quality. The defendant is selling genuine goods made by the claimant, but misrepresents their quality. The harm suffered by the claimant is loss of custom, not because of origin confusion (the goods come from a legitimate source) but because customers will cease to buy the claimant’s goods, thinking that they have declined in quality. The prime example is Spalding v Gamage (1915) 32 RPC 273 (already discussed in Chapter 10 in connection with the guarantee function of trade marks) where the defendant advertised the claimant’s goods as being first class when in fact they were defective and had been disposed of as scrap. Other examples in this category include Wilts United Dairies v Thomas Robinson [1958] RPC 94 (where the tins of condensed milk were past their ‘sell by’ date) and Sodastream Ltd v Thorn Cascade Ltd [1982] RPC 457 (supplying gas canisters for the claimant’s fizzy drinks machines which were not new but which had been refilled).

Misrepresenting geographical origin or composition

The next group of cases all concern a misrepresentation as to the geographical origin or composition of goods. You have encountered these in the discussion of ‘shared reputation’ above. Therefore by now you should appreciate that sparkling wine cannot be called ‘champagne’ unless it has been made in the Champagne district of France (Bollinger v Costa Brava Wine Co. [1961] RPC 116 and Bulmer v Bollinger [1978] RPC 79), that a drink can only be called sherry if it comes from Jerez in Spain (Vine Products v MacKenzie [1969] RPC 1) and that advocaat has to be made to a traditional Dutch recipe (Warnink v Townend [1979] AC 731). You should also note that there is an overlap between this category of passing off and certification trade marks (see section 50 of the Trade Marks Act 1994) and with EC Regulation 2081/92 (OJ [1992] L 208/1) on the protection of geographical indications and designations of origin for agricultural products and foodstuffs. This last-mentioned provision enables producers of regional products to register the name of the place where the product originates with the EU Commission in Brussels.

Attempts to prevent misappropriation of advertising campaigns

Next, it is possible that passing off could be used to protect against the misappropriation of advertising campaigns. It should be remembered that what is being taken is not copyright material contained in the advertisement, but rather the themes and ideas which underlie it. Despite the negative reactions of the Privy Council in Cadbury-Schweppes v Pub Squash Co [1981] RPC 429, other cases have tentatively accepted that passing off could be available, at least where there is clear evidence that the defendant has deliberately set out to take advantage of the success of the claimant’s campaign in order to sell its own product: see RHM Foods v Bovril Ltd [1983] RPC 275 and Elida Gibbs v Colgate-Palmolive [1983] FSR 95. However, you should note that in the Pub Squash case, the presence of such evidence did not convince the court to protect the claimant against misappropriation.


Comparative advertising

Another group of cases concerns comparative advertising (what is a comparative advertisement was explained in Chapter 3). It is accepted that normally comparative advertising will not amount to passing off, because the defendant is comparing two independent products and therefore not creating origin confusion (see Bulmer v Bollinger [1978] RPC 79). However, where the comparison is not explicit (‘here is product A which is cheaper than product B’) but instead makes reference to the claimant’s product in such a way as to imply some sort of trade connection, then this may amount to passing off: see McDonald’s Hamburgers v Burgerking [1986] FSR 45 and Kimberley Clark v Fort Sterling [1997] FSR 877.

Reverse passing off

‘Reverse’ or inverse passing off, as its name suggests, involves an opposite type of misrepresentation to that usually encountered. In ‘classical’ passing off, the defendant will mislead customers by stating that his/her goods are those of the claimant. In ‘reverse’ passing off, the defendant misleads by, for example, showing customers a catalogue of the claimant’s products while intimating that they have been made by the defendant, which is what happened in Bristol Conservatories v Conservatories Custom Built [1989] RPC 455.

There is one other category of ‘extended’ passing off, involving character, personality and image merchandising. As this requires a discussion of copyright, passing off and the law of registered trade marks, as well as the more recent cases on invasion of privacy, this is the subject of a separate chapter (see Chapter 14).

Activity 11.8Go over the material on ‘extended’ passing off, then write a concise summary of the types of misrepresentation which the defendant may commit, giving examples from decided cases. In each case, indicate the harm which was suffered by the claimant’s business. Can this type of harm be reconciled with the traditional role of passing off in preventing origin confusion?


11.5 The foreign claimant and well-known marks



¢ Cornish, Chapter 17: ‘Common Law Liability’ paras 17-16 and 17-17.


¢ Cases: Anheuser-Busch Inc v Budejovicky Budvar NP [1984] FSR 413; Peter Waterman v CBS (THE HIT FACTORY) [1993] EMLR 27; LE MANS Trade Mark Application, 8 November 2004 (available from the United Kingdom Intellectual Property Office website).

You should recollect from your study of this chapter so far that one of the essential elements from Lord Oliver’s ‘classic trinity’ is that the claimant must have a reputation or goodwill. This goodwill is limited to the territory of the United Kingdom or possibly only a part of that territory. But what if the claimant is an overseas undertaking? What must they establish in order to be able to bring a passing off action?

Consider the spectrum of business activity which might occur. The overseas enterprise might have a factory or other business premises (in which case there will be United Kingdom goodwill capable of protection). Another possibility is that there may simply be an office where orders for goods or bookings for services can be made: this was the case in Sheraton Corporation v Sheraton Motels [1964] RPC 202 where the claimant


succeeded (though some argue that the decision was generous to the claimant). Further along the spectrum, there may be customers of the claimant within the jurisdiction (who might have purchased the claimant’s goods or services when out of the United Kingdom, perhaps on holiday) but otherwise no business presence. The last possibility is that the claimant is simply known to the public in the United Kingdom as a result of ‘spill over’ advertising in films, television or magazines (as was the case in Maxim’s v Dye [1978] 2 All ER 55 where, nevertheless, a remedy was granted − Graham J, with a degree of foresight, adopting a ‘global’ approach to the issue of goodwill).The Court of Appeal in Anheuser-Busch Inc v Budejovicky Budvar NP [1984] FSR 413 has since declared that the minimum which will suffice to enable an overseas undertaking to sue for passing off is that there must at least be customers in the United Kingdom who can be misled by the defendant’s misrepresentations. Further, those customers must be members of the United Kingdom public, not visiting foreign nationals such as the American armed forces. In this case, the claim for passing off failed because at the time (you should note the date of the case − 1984) the claimant’s trade mark BUDWEISER for beer was not known to the general public, having been supplied only to US forces personnel stationed temporarily within the United Kingdom.

A further review of the case law can be found in the judgment of Browne Wilkinson VC in Peter Waterman v CBS (THE HIT FACTORY) [1993] EMLR 27. The judgment is critical of earlier decisions (such as Alain Bernadin v Pavilion Properties Ltd [1967] RPC 581) which had insisted that a foreign claimant has to have both business presence and customers in the United Kingdom before being able to sue for passing off.

The above cases can be contrasted with the approach in other common law jurisdictions. In Australia, for example, it has been held that reputation alone is sufficient to enable a foreign litigant to sue for passing off: Conagra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465.

The current case law on the foreign claimant should be reviewed critically because of a provision found in the Trade Marks Act 1994, namely section 56. This provides that the proprietor of a well-known mark is entitled to restrain by injunction the use in the United Kingdom of a trade mark which is identical or similar to his/her mark, in relation to identical or similar goods or services, where the use of the same is likely to cause confusion. The purpose of section 56 (which implements the United Kingdom’s obligations under Article 6bis of the Paris Convention) is to enable overseas trade mark owners, who have neither registration nor use of their mark in the United Kingdom, to prevent others misappropriating it on evidence that their mark is well known. Individuals or organisations domiciled in the United Kingdom cannot rely on this provision, again because of the wording of the Paris Convention: Jules Rimet Cup Ltd v The Football Association Ltd [2008] FSR 254.

An example of section 56 in operation is LE MANS Trade Mark Application, 8 November 2004 (available from the United Kingdom Intellectual Property Office (UKIPO) website). In the case, Richard Arnold QC, sitting as the Appointed Person, refers to the Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks adopted by WIPO in September 1999, particularly Article 2 thereof which lists the factors to be taken into account by any national authority in determining whether a mark is well-known. You may find it helpful to read paras.55–62 of the LE MANS case in order to gain an understanding of what is a well-known mark.

The question you should ask yourself as a result of the above discussion is whether section 56 will lead to the reformulation of the ingredients for passing off?

Activity 11.9Read the cases of Anheuser-Busch Inc v Budejovicky Budvar NP and Peter Waterman v CBS (THE HIT FACTORY). What do the cases say about the nature of the goodwill which an overseas undertaking must prove before it can bring a passing off action before United Kingdom courts? Are the cases consistent with earlier authority? Are they appropriate in the twenty-first century?


11.6 The future of passing off

Essential reading ¢ Bainbridge, Chapter 23: ‘Passing Off’ p.858.

¢ Bently and Sherman, Chapter 34: ‘Damage’ pp.778−80.



¢ L’Oréal SA v Bellure NV [2008] RPC 196.

Useful further reading

¢ Horton, A. and A. Robertson ‘Does the UK or the EC Need an Unfair Competition Law?’ [1995] EIPR 568.

¢ Spence, M. ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 LQR 472.

¢ Carty, H. ‘Dilution and Passing Off: Cause for Concern’ (1996) 112 LQR 632.


From the above discussion of passing off, you should begin to appreciate that the case law tends to go through phases. It is possible to find many instances where the judges appear to be more liberal in their treatment of passing off (see for example Vine Products v MacKenzie [1969] RPC 1, Erven Warnink BV v Townend & Sons [1979] AC 731 and Taittinger v Allbev [1993] 2 CMLR 741). Equally, however, there are times when judges are far more conservative (see Cadbury-Schweppes v Pub Squash Co. [1981] RPC 429, Harrods v Harrodian School [1996] RPC 697 and Hodgkinson & Corby v Wards Mobility Service [1995] FSR 169 for three contrasting decisions). In so far as it is possible to predict future developments, you will find it helpful to reflect on how passing off might change in the future. Such change might take place in one of two ways, either through contraction or expansion.

11.6.1 Contraction of passing offSince 1994, the law of registered trade marks has changed dramatically. In particular, the criteria for what can be a registered mark have been relaxed appreciably (see the discussion of section 3 of the 1994 Act in Chapter 12) and the scope of protection accorded to such a mark has expanded far beyond that found under old United Kingdom law (see the explanation of section 10 of the 1994 Act in Chapter 13). If (as is the case) it is possible to register shapes, packaging and colours as trade marks, that area of passing off dealing with ‘trade dress’ (see 11.4.1 above166 ought to decline in importance. Equally, if the trade mark infringement action is no longer confined to the goods of the registration (as was the case under the old law), but protects against use on similar goods and dissimilar goods, then cases like the Lego case are of historical interest only. Further, as the law of registered trade marks now provides protection against dilution, then those cases which have confined passing off to instances of origin confusion beg the question whether passing adds anything to the law of registered trade marks. Lastly, the views of the ECJ and CA in Arsenal v Reed appear to indicate that trade mark law has moved very sharply towards protecting the interests of the trade mark owner rather than those of the consumer. What role can be left for passing off?

11.6.2 Expansion of passing offThe alternative argument about the future of passing off is based on the premise that the United Kingdom ought to have a law of unfair competition, and that in the absence of legislation, passing off is the proper vehicle to provide such protection. The arguments (and supporting literature) are clearly listed in Bently and Sherman (pp.778−80) and you are strongly recommended to read this passage carefully.

Try also to read the articles by Horton and Robertson, and Spence and Carty listed above and come to your own conclusion as to whether passing off should evolve into a tort of unfair competition. This will enable you to answer the second sample examination question below.


Activity 11.10Read again the key pages in Bently and Sherman and the articles listed above. Then prepare your own summary of the arguments for and against the development of passing off into a tort of unfair competition.



u explain, using relevant authority, the factors which must be proved by a claimant in order to succeed in an action for passing off

u describe the various ways in which passing off may be used to protect trade marks and other symbols used in the course of trade

u discuss the ways in which passing off might develop in the future

u list the key elements in the definition of passing off.

Sample examination questionsQuestion 1 Lustre Ltd is a United Kingdom manufacturer of skin-care products. It seeks your advice about its plans to launch two new products in the United Kingdom.

u Lustre Ltd intends to launch a new range of facial washes and soaps in the United Kingdom called FRENCH SOAP. The company has chosen this name as market research shows that a substantial section of the United Kingdom public consider French soap to be a luxury item. The French soap-making industry, led by the largest French company in the industry, Grand SA, wants Lustre Ltd to rename its FRENCH SOAP range. Grand SA acknowledges, however, that much of the soap sold in France is actually produced by French companies based in Switzerland and that in practice, there is little difference between French soap and soap from other countries.

u Lustre Ltd is about to launch a budget range of shampoo in the United Kingdom, called GRAND HAIR. The French company, Grand SA has written to Lustre Ltd to protest about this planned launch. Grand SA produces its own luxury hair products (GRAND HAIR LUXE) which are very popular with English people visiting France, and Grand SA had intended to begin selling these luxury products in the United Kingdom next year.

u Assuming that there are no registered trade marks in respect of FRENCH SOAP or GRAND, advise Lustre Ltd as to whether Grand SA can stop it from using FRENCH SOAP and GRAND HAIR.

Question 2 ‘The fact that there is no general concept of unfair competition in the United Kingdom is indefensible.’

Discuss.

Advice on answering the questionsQuestion 1 As there are no registered marks, Lustre Ltd may become the defendant to passing off actions brought by Grand SA. A good answer should do the following.

u List the elements of the action as given by Lord Oliver in Reckitt & Colman Products Ltd v Borden Inc.

u In respect of FRENCH SOAP, consider the requirement of shared reputation as discussed in the various drinks cases. Does FRENCH SOAP meet these criteria? Consider further the Chocosuisse case and the difficulties encountered by the Court of Appeal in determining who were the relevant producers.

u In respect of FRENCH SOAP, are the other elements of passing off established? Does it matter that there will not be confusion, bearing in mind that this type of misrepresentation falls within ‘extended’ passing off?


u In respect of GRAND HAIR, where Grand SA will be suing on its own behalf, can Grand SA meet the requirements for a foreign claimant? Are the other elements of passing off established?

Question 2 A good answer should:

u explain the traditional approach under United Kingdom law which has denied the existence of protection against unfair competition (as explained in the Australian cases of Victoria Park Racing v Taylor and Moorgate Tobacco v Philip Morris discussed in Chapter 2)

u consider whether passing off could be developed to encompass unfair competition, but add that this would depend on judicial willingness to expand the tort; comparison could be made between the views of Lord Diplock in Erven Warnink BV v Townend & Sons and Lord Scarman in Cadbury-Schweppes v Pub Squash Co about how the common law should respond to unfair trading practices

u rehearse some of the arguments for and against the need for a law of unfair competition, making reference to the extensive literature cited in Bently and Sherman.


Reflect and review








Need to study again

I can explain, using relevant authority, the factors which must be proved by a claimant in order to succeed in an action for passing off.

¢

¢

¢

I can describe the various ways in which passing off may be used to protect trade marks and other symbols used in the course of trade.

¢

¢

¢

I can discuss the ways in which passing off might develop in the future.

¢ ¢ ¢

I can list the key elements in the definition of passing off.

¢ ¢ ¢


Must revise

Revision done

11.1 The nature of passing off ¢ ¢

11.2 The elements of passing off ¢ ¢

11.3 Defences to passing off ¢ ¢

11.4 Illustrations of the tort ¢ ¢

11.5 The foreign claimant and well-known marks ¢ ¢

11.6 The future of passing off ¢ ¢


Notes

Contents

Introduction 172

12 1 Background:registryprocedure 173

12 2 Themeaningof‘mark’ 174

12 3 Absolutegroundsforrefusal 177

12 4 Relativegroundsforrefusal 186


12 Registration of trade marks


Introduction

The aim of this chapter is to explain the steps which must be taken and the criteria which must be met when applying to register a trade mark. We shall set the scene by briefly discussing the procedure of the United Kingdom Trade Marks Registry before examining three fundamental issues, namely the definition of what can be a trade mark, the absolute grounds of refusal and the relative grounds of refusal.

This is an area of your course when you must appreciate the European dimension of intellectual property. The registrability of trade marks is one of several areas where the Trade Marks Directive radically changed United Kingdom domestic law. Further, as explained in Chapter 10, there has been a huge volume of case law from the European Court of Justice (ECJ). This case law has arisen either on appeal from the Community trade mark office (OHIM) or as a result of a request for a preliminary ruling on the meaning of the Directive made by one of the national courts of the Member States under Article 267 of the Treaty on the Functioning of the European Union (TFEU) (formerly Article 234 EC). As previously explained, because the key provisions in the Directive and the Community Trade Mark Regulation are identically worded, these two lines of case law are interchangeable.

The other matter you must remember as you work your way through this chapter is the commercial functions performed by trade marks. These were discussed in Chapter 10 and if need be you should return to your notes to remind yourself of the key points. Trade marks act as communicators between the manufacturer of a product and the ultimate consumer. You therefore need to place yourself (if you can) in the position of the relevant English consumer of the product, and to decide what message the trade mark conveys to such a person. This is the test adopted by the ECJ when determining all the issues of registrability, and you must familiarise yourself with it at the earliest opportunity.


u summarise in outline the procedural steps which are taken when obtaining registration of a trade mark

u explain the key elements which go to make up the statutory definition of a trade mark

u explain how the absolute grounds for the refusal of registration of a trade mark have been interpreted by the ECJ, including the policy underlying these grounds (where such policy has been explained by the Court)

u explain how the relative grounds for refusal of registration of a trade mark interrelate and how they are to be applied, using the case law of the ECJ to support your explanation

u list the points which must be satisfied before a trade mark can be entered on the United Kingdom Trade Marks Register.

Intellectual property 12 Registration of trade marks page 173

12.1 Background: registry procedure

Essential reading ¢ Bainbridge, Chapter 20: ‘The UK Trade Mark - Registrability, Surrender,

Revocation, and Invalidity, Property Rights and Registration’ pp.733−39.

¢ Bently and Sherman, Chapter 35: ‘Trade Mark Registration’ pp.781−95.

¢ Cornish, Chapter 18: ‘Registered Trade Marks’ paras 18-01 to 18-09.

¢ Norman, Chapter 14: Registration of Trade Marks’ sections 14.1 and 14.2.

The steps which are to be taken when an applicant seeks registration of a trade mark in the United Kingdom are relatively straightforward. As a result of The Trade Marks (Relative Grounds) Order 2007 (SI 2007/1976), Registry procedure was significantly amended with effect from 1 October 2007. The Trade Marks Act 1994 (TMA) section 7 (dealing with honest concurrent use) was repealed and section 8 brought into force, thus partially aligning United Kingdom practice with that of OHIM. You should ensure that any textbook you consult is up-to-date with regard to domestic procedure.

In outline, Registry procedure is as follows. Once an application has been filed using the official application form (Form TM3, which can be downloaded from the United Kingdom Intellectual Property Office (UKIPO) website) and the appropriate fees paid, then the application will be examined by an Examiner in the Trade Marks Registry. A search for prior rights recorded on the United Kingdom Register will be also conducted. The purpose of the examination is to ensure that all the formal requirements in the TMA and the associated Trade Mark Rules have been met. The Examiner may also raise one of two substantive objections, namely that the ‘mark’ (whatever it is) does not satisfy the definition of ‘trade mark’ in section 1 TMA and/or that the application is barred by one or more of the absolute grounds for refusal found in section 3. However, if there are no objections, or if the applicant overcomes these objections either by correspondence or as the result of a hearing, then the mark is advertised in a weekly publication issued online by the Trade Marks Registry, namely the Trade Marks Journal. Third parties then have a maximum period of three months (which cannot be extended) within which to file a notice of opposition. In the United Kingdom system, an opposition can be based on the same grounds as any objection raised by the Trade Mark Examiner, that is, what has been applied for is not a trade mark or is barred by absolute and/or relative grounds, although an objection on relative grounds can only be brought by the owner of the earlier right. By contrast, the EU trade mark registration system, and indeed other national systems, provide that absolute grounds can only be raised by the registry and relative grounds by third parties. If no opposition is filed or if any opposition is overcome, then the mark will be registered for an initial period of 10 years (calculated from the filing date). It can be renewed every 10 years thereafter.

Activity 12.1Read the account of the trade mark application procedure in either Bently and Sherman, Cornish or Norman, then write a concise summary of the key stages in the application procedure. Your answer should include an indication of:

u which substantive arguments might be raised against the application

u by whom these arguments could be raised

u at which stages of the process they could be raised

u whether there are any time limits to any stages of the process.



u summarise in outline the procedural steps which are taken when obtaining registration of a trade mark.

You are not expected to become expert in the intricacies of Registry procedure. Instead, the procedure is explained here (and indeed in most of the recommended texts in diagrammatic form) so that you can appreciate the context in which the legal issues arise. Registry procedure is not examinable as such. Instead, examination questions may well ask you to consider whether particular marks are capable of registration, or whether an application is barred by one or more prior rights.


12.2 The meaning of ‘mark’



¢ Bently and Sherman, Chapter 36: ‘Subject Matter’ pp.805−16.


¢ Norman, Chapter 14: ‘Registration of Trade Marks’ section 14.3.

¢ Trade Marks Directive Article 2, TMA section 1.

¢ Cases: C-273/00 Sieckmann v Deutsches Patent- und Markenamt [2002] ECR I-11737; C-283/01 Shield Mark BV v Joost Kist [2003] ECR I-14313; Case C-104/01 Libertel Groep BV v Benelux-Merkenbureau [2003] ECR I-3793; Case C-299/99 Philips Electronics BV v Remington Consumer Products [2002] ECR I-5475.

Our discussion of what comprises a trade mark begins with an analysis of the relevant statutory provision, namely section 1 of the TMA. This is based on Article 2 of the Trade Marks Directive (though the wording is not identical). You should read the wording of both provisions carefully now.

Both provisions contain an identical but non-exhaustive list of things which can be a trade mark, with shapes now expressly included (although as we shall see below, section 3(2) imposes policy limitations on the registration of shapes). The express inclusion of shapes as potential trade marks overturns a House of Lords’ decision under the Trade Marks Act 1938, Re COCA COLA Trade Marks [1986] RPC 421, which was to the effect that a bottle could not be a trade mark ‘because it would create an unfair monopoly’. You should immediately recognise the illogicality of that conclusion as shapes of containers are protected under the law of passing off (see Chapter 11).

The ECJ has offered further guidance as to the scope of Article 2. It has confirmed that the list in Article 2 is not intended to be exhaustive (Case C-283/01 Shield Mark BV v Joost Kist [2003] ECR I-14313, AG Colomer at paragraph 22). Further, Article 2 sets out minimum requirements for something to be a trade mark (Case C-404/02 Nichols plc v Registrar of Trade Marks, [2004] ECR I-8499 per AG Colomer at paragraph 32). Last, the policy of Article 2 is to define the types of sign of which a trade mark may consist irrespective of the goods or services for which protection is sought (Case C-363/99 Koninklijke KPN Nederland NV v Benelux-Merkenbureau (POSTKANTOOR) [2004] ECR I-1619). In other words, the test under Article 2 is to be carried out in the abstract, without reference to the statement of goods or services included in the Trade Mark Application Form.

There are three elements which go to make up the ‘definition’ of ‘trade mark’: sign, capability of graphic representation and capability of distinguishing.

12.2.1 ‘Sign’United Kingdom courts have declared that a ‘sign’ is ‘anything which conveys information’ (Philips Electronics NV v Remington Consumer Products [1998] RPC 283 at 298, per Jacob J), so that a word is ‘plainly included within the meaning of sign’ (British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 at 305, per Jacob J). The ECJ has gone further by stating that human beings perceive and recognise messages (i.e. communicate) with the help of senses other than sight. Any message capable of perception by the senses can be a trade mark, provided it is potentially capable of distinguishing (Case C-273/00 Sieckmann v Deutsches Patent- und Markenamt [2002] ECR I-11737, per AG Colomer at paragraphs 20– 21). Such messages need not be visual (Case C-283/01 Shield Mark BV v Joost Kist [2003] ECR I-14313, AG Colomer at paragraph 30) and so could appeal to the sense of hearing, smell, taste or touch. However, these sensory signs (as they are called) give rise to other difficulties.


This liberal approach should be contrasted with that found under former United Kingdom law. Here, judges had assumed that a product could not be a trade mark of itself (Re James’s Trade Mark (1886) 33 Ch D 392) and that the trade mark had to be able to be described separately from the goods (Interlego AG’s Trade Mark Applications [1998] RPC 69 at 108 to 110). However, it was accepted that a trade mark could cover the whole surface of the goods (Smith, Kline & French Laboratories Ltd v Sterling Winthrop Group Ltd [1976] RPC 511, HL). A further difficulty encountered under former United Kingdom law was that a trade mark had to be visible at point of sale, so that the stripes in toothpaste could not act as a trade mark as the consumer would not see the mark until the goods were used (Unilever’s Application [1980] FSR 286). However, this thinking has probably been overturned by the ruling in Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273 (discussed in Chapter 10), which is to the effect that one must take into account the perceptions of subsequent users of the product as well as those of the initial purchaser in determining the scope of the trade mark right.

The broad interpretation of the word sign by the ECJ did not, however, help the applicant in Case C-321/03 Dyson Ltd v Registrar of Trade Marks [2007] RPC 619 where the Court ruled that a transparent bin for collecting dust for a vacuum cleaner was a concept not a sign.

12.2.2 Capable of graphic representationGraphic representation is in one respect a bureaucratic condition. A trade mark applicant is required to put a representation of the sign in the 8cm by 8cm box on the Trade Mark Application Form. Although this will not pose any difficulties for ‘standard’ trade marks, such as words or pictures, it has proved more of a challenge for other marks, in particular shapes, colours and all sensory marks.

The issue of graphic representation has been the subject of detailed scrutiny by the ECJ. In Case C-273/00 Sieckmann v Deutsches Patent- und Markenamt [2002] ECR I-11737 paragraphs 45–55 the Court dealt with two issues, namely the reason why there is a requirement of graphic representation and, secondly, the criteria which must be met.

Activity 12.2Read the ruling in Sieckmann carefully. Then summarise:

a. the reasons why Article 2 of the Directive (section 1 TMA) has the requirement of graphic representation

b. the criteria which any form of graphic representation must meet.

When you have completed Activity 12.2, return to the ruling in Sieckmann and consider its facts. The applicant had attempted to register the smell of cinnamon. The ECJ declared that in principle a smell could be a trade mark. Then, however, the Court gave a negative reply to the referring court about whether a chemical formula, a written description or a sample of the smell could meet the criteria it had just established. You should note that the referring court merely mentioned these three particular forms of representation, but did not ask the ECJ how sensory marks should be represented.

The Sieckmann criteria have since been repeated by the ECJ in a number of cases involving other ‘non-standard’ marks. In Case C-283/01 Shield Mark BV v Joost Kist [2003] ECR I-14313, it applied the same test to sound marks. As a result, tunes are capable of graphic representation (by means of musical notation) but with regard to other sound marks which cannot be so represented, a description in words, a spectrogram or a sound recording are not sufficient under the Sieckmann criteria. The case does not deal with whether sound marks satisfy Article 3 nor how they may be infringed: the referring court asked questions only about Article 2 of the Directive. Concerning the graphic representation of colours, the ECJ used the Sieckmann criteria in Case C-104/01 Libertel Groep BV v Benelux-Merkenbureau [2003] ECR I-3793, where it declared that the applicant should use the Pantone scheme or any other similar internationally recognised identification system for colours.

Graphic representation means something which can be shown on paper in two-dimensional form.

How else do you think a smell could be graphically represented? How could one represent a taste trade mark conveyed by the sense of taste?

Pantone is a widely used scheme of colour shades which are represented by code numbers indicating which colour components go to make up that shade.


You should note that both Sieckmann and Shield Mark reveal an inherent weakness in the Article 267 TFEU referral mechanism: the ECJ can only respond to the questions posed by the national court. The right questions are not always put.

The United Kingdom Trade Marks Registry has basically applied the same test as Sieckmann to ‘non-standard’ marks. For example, in relation to smells, in John Lewis of Hungerford Ltd’s Trade Mark Application [2001] RPC 575 it was held that to enter words describing the smell on the Trade Mark Application form was not enough. Similarly, with colours, in Ty Nant Spring Water Ltd’s Trade Mark Application [2000] RPC 55 it was held that a colour identified by its refractive index was not sufficiently ascertainable. With regard to shape marks, the shape should be shown by reference to a diagram or photograph: words describing the shape are not enough. Hence, in Swizzels Matlow Ltd’s Trade Mark Application [1998] RPC 244, it was not sufficient to indicate the shape of a sweet by placing the words ‘a chewy sweet on a stick’ in the box on Form TM3.

The fact that many applicants fail to heed the Sieckmann ruling is evidenced by the decision in T-305/04 Eden SARL v OHIM [2005] ECR II-4705. Here, the application was for ‘the smell of ripe strawberries’ for cleaning preparations but the application form merely showed a picture of a strawberry accompanied by the words ‘the smell of ripe strawberries’. It was held that this did not comply with the Sieckmann criteria.

12.2.3 ‘Capable of distinguishing’The presence of this phrase in section 1 has caused United Kingdom courts some difficulty. They have devoted a considerable amount of time trying to reconcile it with a phrase which appears later in section 3(1) (the provision dealing with absolute grounds), namely ‘devoid of distinctive character’. By contrast, the ECJ has taken a much more direct route when interpreting this requirement. In Case C-299/99 Philips Electronics BV v Remington Consumer Products [2002] ECR I-5475 (at paragraphs 39 and 47-50) the Court explained that if a trade mark has distinctive character (either inherently or as a result of use) then it must be capable of distinguishing. ‘Capable of distinguishing’ in Article 2 simply means that the sign must be able to differentiate the goods of one undertaking from another and so fulfil its essential function of guaranteeing the origin of the product. Could the sign enable the public (i.e. consumers) to decide that the goods bearing the mark come from just one business which is responsible for the quality of the goods? The Court added that all types of trade mark should receive the same assessment under Article 2. In the case of ‘non-standard’ marks such as shapes, there is no requirement that the shape has to have any additional embellishment before it can be a trade mark.

Other cases decided by the ECJ or its General Court (previously called the Court of First Instance) have emphasised that the issue in Article 2 (section 1 TMA) is whether the sign has the potential to act as a trade mark (see in particular Case C-283/01 Shield Mark BV v Joost Kist [2003] ECR I-14313, per Colomer AG at paragraph 20; and Case T-316/00 Viking Umwelttechnik GmbH v OHIM [2002] ECR II-3715, at paragraphs 23–24). Put simply, what ‘capable of distinguishing’ means is that the category of sign (e.g. a shape, musical tune, colours) must have the potential to function as a trade mark, to enable consumers to choose between different brands, regardless of the goods or services to which it is to be applied. Whether the sign actually does so is a matter to be determined under the absolute grounds for refusal. It should therefore be clear that Article 2 of the Directive (section 1 TMA) provides a very low threshold. Almost anything could be a trade mark. This is the meaning of ‘capable of distinguishing’ which you must remember.


Activity 12.3Go over your notes on the meaning of ‘trade mark’ in section 1 TMA (Article 2 of the Directive). Then complete the following chart by providing a definition of the elements found in section 1, together with the relevant case law where this definition may be found.

Element Definition Authority

‘Sign’

‘Capable of graphic representation’

‘Capable of distinguishing’

No feedback provided. You may need to draw the chart in a large enough format to give yourself sufficient space to fill it in.


u explain the key elements which go to make up the statutory definition of a trade mark.

12.3 Absolute grounds for refusal



¢ Bently and Sherman, Chapter 37: ‘Absolute Grounds for Refusal’ pp.817−56.


¢ Norman, Chapter 14: ‘Registration of Trade Marks’ section 14.4.


¢ Cases: C-383/99 P Procter & Gamble Company v OHIM (BABY DRY) [2001] ECR I-6251; Case C-191/01 P OHIM v Wm Wrigley Junior Co (DOUBLEMINT) [2003] ECR I-12447; Case C-299/99 Philips Electronics BV v Remington Consumer Products [1999] RPC 809 (CA) and [2002] ECR I-5475 (ECJ); Cases C-53/01, 54/01 & 55/01 Linde AG, Winward Industries Inc & Rado Uhren AG v Deutsches Patent- und Markenamt [2003] ECR I-3161; Cases C-108/97 and 109/97 Windsurfing Chiemsee Produktions und Vertriebs GmbH v Boots und Segelzubehor Walter Huber [1999] ECR I-2779; Bongrain’s Application [2005] RPC 306.

¢ Strowel, B. ‘Benelux: A Guide to the Validity of Three-dimensional Trade Marks in Europe’ [1995] EIPR 154.

Useful further reading ¢ Firth, A., E. Gredley and S. Maniatis ‘Shapes as Trade Marks: Public Policy,

Functional Considerations and Consumer Perception’ [2001] EIPR 86.

12.3.1 Overview of absolute groundsAbsolute grounds are concerned with the internal characteristics of the trade mark, that is, with some innate quality which means it cannot be registered. Section 3 TMA should be contrasted with its predecessor, the Trade Marks Act 1938, which contained a list of ‘essential particulars’, which were positive requirements which the applicant had to satisfy. The current legislation instead contains a list of negative objections which the Registry (or an opponent) must establish. Provided a ‘sign’ satisfies the very low threshold test in section 1, it is to be presumed to be registrable unless the Registry can show that it fails under one or more of the absolute grounds (section 3). In other words, the onus of proof has switched from the trade mark applicant to the Registrar.


Further, section 3 contains an exhaustive list of objections: the Registry does not have any residual discretion, as it did under the Trade Marks Act 1938.

Before examining the absolute grounds in detail, it will be useful to get an overall view of the structure of section 3. You should therefore read section 3 and its counterpart in the Directive, Article 3 carefully now. Note how there is one general subsection (section 3(1)) which applies to all types of trade marks, no matter what they are, and which is qualified by a proviso. The proviso only qualifies section 3(1), not the remaining subsections. The other provisions apply to specific cases only. Hence:

u section 3(2) deals with three-dimensional shape marks and no other type of mark

u section 3(3)(a) and (b) deal respectively with marks which are contrary to public policy or are deceptive

u section 3(4) and (5) deal respectively with marks which are contrary to any provision of United Kingdom or EU law or which consist of or contain any specially protected emblems, such as coats of arms, state flags or the Olympic symbol

u section 3(6) deals with applications made in bad faith.

Observe how the later subsections are much narrower than the earlier ones: think of section 3 as resembling an inverted triangle. Another thing to remember is that each one of the absolute grounds is separate: just because an applicant succeeds in convincing the Registrar that one of the grounds does not apply, does not mean that another might not prove to be an insuperable obstacle.

There is one other general comment to make before we look at the absolute grounds in detail. The ECJ has, over the last decade, established that the assessment of both the absolute and relative grounds is to be made through the eyes of the average consumer. Who this person is will vary depending on the nature of the goods or services to which the mark is to be affixed. If the goods are sold in a supermarket, then the relevant consumer will be the average shopper, but if the goods are specialist goods, then the consumer will be someone in that particular line of business. Guidance as to the characteristics of the average consumer can be found in Case C-342/97 Lloyd Schuhfabrik Meyer & Co KG v Klijsen Handel BV [1999] ECR I-3819 at paragraph 26.

12.3.2 Absolute grounds: general provisionsWhen considering section 3(1), the structure and language of this provision should be noted. Read section 3(1) again now. Note that it has four separate paragraphs. However, paragraph (a) should be considered as separate from the other paragraphs, for two reasons. First, it uses the word ‘sign’ whereas the others use the phrase ‘trade mark’. Second, the proviso as to acquired distinctiveness can overcome an objection under paragraphs (b), (c) and (d) but not paragraph (a).

As to paragraphs (b), (c) and (d), each of the grounds for refusal listed in Article 3(1) of the Directive is independent although there is overlap between them; and each must be interpreted in the light of the public interest underlying them (Case C-265/00 Campina Melkunie BV v Benelux-Merkenbureau (BIOMILD) [2004] ECR I-1699). Each of these three paragraphs has a different underlying policy (Case C-329/02 P SAT.1 SatellitenFernsehen GmbH v OHIM (SAT.2) [2004] ECR I-8317). Each of these three paragraphs require the trade mark to be considered concretely, that is, in relation to the goods and services to which the mark will be applied, judged through the eyes of the average consumer of those goods (Case C-363/99 Koninklijke KPN Nederland NV v Benelux-Merkenbureau (POSTKANTOOR) [2004] ECR I-1619).

Now we can take the four paragraphs in turn.

Signs not satisfying section 1

First, section 3(1)(a) declares that signs not satisfying section 1 shall not be registered. If we refer back to section 1, this reminds us again of the ingredients of a registrable trade mark, namely ‘sign’, ‘capable of graphic representation’ and ‘capable of

We shall look at the decision in Lloyd later, in relation to the relative grounds for refusal. For the moment you should remember that the average consumer is deemed to be reasonably well informed, reasonably observant and circumspect.


distinguishing’. A more challenging issue is to determine the relationship between section 1 and section 3. According to Philips Electronics NV v Remington Consumer Products [1998] RPC 283 at 289, per Jacob J, the relationship between section 1 and section 3 is the difference between the potential of the sign to distinguish, considered in the abstract, and whether it actually does so, either inherently or factually. This approach has been endorsed by the CFI and ECJ. In particular, AG Jacobs in Case C-383/99 P Procter & Gamble Company v OHIM (BABY DRY) [2001] ECR I-6251, at paragraphs 63–70, declared that the equivalent provision to section 3(1)(a) in the Community Trade Mark Regulation was tautologous, merely repeating the definition of ‘trade mark’ in the equivalent of section 1. The ECJ itself in Case C-299/99 Philips Electronics BV v Remington Consumer Products [2002] ECR I-5475 stated that where a mark is distinctive as a result of the use made of it, then there is not a separate objection that it is incapable of distinguishing. The reason why the Court made this statement is because of the question referred to it by the United Kingdom Court of Appeal. The latter appeared reluctant to abandon the discretion it possessed under the 1938 Act to reject a trade mark application even if it did not fall within any of the express objections in the legislation and was minded to use section 3(1)(a) as a means of retaining that discretion.

Since Philips v Remington, the Court of Appeal itself has recognised that section 3(1)(a) is not a further ground of objection to a trade mark application if the ‘sign’ satisfies the very low threshold of section 1: West (t/a Eastenders) v Fuller Smith & Turner plc [2003] FSR 816. This latter case cast serious doubt on a previous decision of the same court, Bach Flower Remedies Ltd v Healing Herbs [2000] RPC 513. In consequence, Bach Flowers is best avoided, even though some textbooks devote considerable time to discussing it. Further, OHIM, the Community Trade Mark Office, as a matter of practice does not raise objections under the equivalent of section 3(1)(a). The provision is therefore best ignored.

Marks devoid of any distinctive character

Next, section 3(1)(b) prohibits the registration of trade marks which are devoid of any distinctive character. According to British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 at 306, the phrase ‘requires consideration of the mark on its own, assuming no use. Is it the sort of word (or other sign) which cannot do the job of distinguishing without first educating the public that it is a trade mark?’ The question to be asked is whether the mark is inherently distinctive. Put simply, does the sign say to the consumer (without more) ‘I am a trade mark’? The General Court put this another way (in Case T-305/02 Nestlé Waters France v OHIM [2003] ECR II-5207), namely whether the mark is ‘incapable of performing the essential function of a trade mark, that is, identifying the origin of the goods or services so as to enable the consumer who acquired them to repeat the experience if it proved to be positive or to avoid it if it proved to be negative’.

The test to be applied under section 3(1)(b), according to the ECJ in Case C-299/99 Philips Electronics BV v Remington Consumer Products [2002] ECR I-5475 paragraphs 59 and 63, is that the mark is to be considered in relation to the goods or services through the eyes of the relevant public to see if it enables members of the public to distinguish the product in question from those having a different trade origin. Does the relevant section of the public perceive the sign as a trade mark, taking into account that the average consumer is reasonably attentive and makes an overall assessment of the mark? The test is therefore a concrete one (i.e. in relation to the goods/services of the application), taking into account all the relevant factual circumstances. Further, the test draws no distinction between different categories of trade mark (Cases C-53/01, 54/01 & 55/01 Linde AG, Winward Industries Inc & Rado Uhren AG v Deutsches Patent- und Markenamt [2003] ECR I-3161), although in the case of ‘non-standard’ marks (such as shapes, colours and sensory marks) the consumer is less used to viewing such signs as trade marks. As an example, see the decision in Case T-316/00 Viking Umwelttechnik GmbH v OHIM [2002] ECR II-3715, where it was held that grey-green colour scheme on garden tools would be viewed by customers as relating to the finish of the product rather than indicating origin.

The policy behind section 3(1)(b) was articulated by the ECJ in Case C-104/01 Libertel Groep BV v Benelux-Merkenbureau [2003] ECR I-3793, a case concerned with an application to register the colour orange for telephony services. The Court stated that the public interest was aimed at the need not to restrict unduly the availability of colours for


other traders who offer goods or services of the same type as those in respect of which registration is sought. More recently, the Court has modified its thinking, declaring in Case C-404/02 Nichols plc v Registrar of Trade Marks [2004] ECR I-8499, at paragraphs 29–32, that paragraph (b) does not have the policy of requiring certain signs to be left free for other traders (contrast the policy underlying section 3(1)(c) discussed below). Rather, the public interest underlying paragraph (b) cannot be separated from the essential function of a trade mark: Case C-329/02 P SAT.1 SatellitenFernsehen GmbH v OHIM (SAT.2) [2004] ECR I-8317, paragraphs 26, 40–41. In other words, the policy underlying paragraph (b) is concerned with whether the sign in question acts as a trade mark for those goods or services. In the SAT.2 decision, the Court added that paragraph (b) does not require ‘linguistic or artistic creativity or imaginativeness on the part of the proprietor of the trade mark. It suffices that the trade mark should enable the relevant public to identify the origin of the goods or services protected thereby and to distinguish them from those of other undertakings.’

Examples of how the above test has been applied include:

u common English surnames (Case C-404/02 Nichols plc v Registrar of Trade Marks [2004] ECR I-8499)

u chocolate bars shaped like cigars (Joined Cases T-324/01 and T-110/02 Axion SA & Christian Belce v OHIM [2003] ECR II-1897)

u colours (Case C-104/01 Libertel Groep BV v Benelux-Merkenbureau [2003] ECR I-3793)

u composite marks consisting of words and numerals (Case C-329/02 P SAT.1 SatellitenFernsehen GmbH v OHIM (SAT.2) [2004] ECR I-8317)

u composite marks consisting of the colours and shapes of detergent tablets (Cases C-468/01 P to C-472/01 P and C-473 and 474/01 P Procter & Gamble Co v OHIM [2004] ECR I-5141)

u surface decoration of glass panels (Case T-36/01 Glaverbel v OHIM [2002] ECR II-3887).

Where the mark is composite (e.g. words and numerals combined or colour and shape combined), the tribunal must make an overall assessment of the mark, because that is what the consumer would do. Even though component parts taken individually may lack distinctive character, this does not mean that the combination cannot present a distinctive character: Case C-329/02 P SAT.1 SatellitenFernsehen GmbH v OHIM (SAT.2) [2004] ECR I-8317.

One particular group of cases which troubled United Kingdom courts concerned slogans. Advertising slogans (sometimes called ‘strap lines’) are used extensively in conjunction with the principal trade mark. Such slogans are usually perceived by consumers as an invitation to try the product or service and, as they do not indicate origin, were held not registrable under the 1938 Act (HAVE A BREAK Trade Mark [1993] RPC 217) unless the slogan had been used on its own so that it is the only brand name on the product (I CAN’T BELIEVE IT’S YOGURT Trade Mark [1992] RPC 533). By contrast, the ECJ has applied the concrete test to slogan marks. It has said that there is no need for a slogan to be particularly creative, but that normally the consumer would not regard a strap line as indicating origin (Case C-64/02 P OHIM v Erpo Möbelwerk GmbH (‘The Principle of Comfort’) [2004] ECR I-10031). It would therefore be up to the applicant to show factual distinctiveness under the proviso. Further, in Case C-353/03 Société des Produits Nestlé SA v Mars UK Ltd [2005] ECR I-6135, and in contrast to the views of the Court of Appeal, the ECJ ruled that it didn’t matter that the slogan had been used in conjunction with another trade mark, because even a secondary mark could, in appropriate circumstances, acquire factual distinctiveness in its own right. Following this last ruling, the United Kingdom Trade Marks Registry issued a new Practice Amendment Notice setting out its policy with regard to the registrability of slogans. The Notice (available from www.ipo.gov.uk/t-pan-106.htm) should be studied carefully as it gives good examples of slogans which are registrable because they do not lack distinctive character and are not descriptive.


One practical point is that an applicant can seek protection for multiple classes of goods or services in a single application. Where the trade mark application relates to several classes of goods and services, the Registry is required to consider section 3(1)(b) in relation to each item on the list: Case C-363/99 Koninklijke KPN Nederland NV v Benelux-Merkenbureau (POSTKANTOOR) [2004] ECR I-1619. Consequently, the mark may be inherently distinctive of some goods or services but not of others. As an example, see Case T-173/00 KWS Saat v OHIM [2002] ECR II-3843 (the colour orange was inherently distinctive of consultancy services but not so for seeds nor agricultural equipment).

Marks consisting exclusively of descriptive signs

Next, section 3(1)(c) prohibits the registration of trade marks consisting exclusively of descriptive signs. You should note the breadth of the section as it refers to ‘descriptive signs’ (and so would apply to colours and shapes) as well as to ‘other characteristics of the goods or services’. So, in Case C-498/01 P OHIM v Zapf Creation AG (NEW BORN BABY) [2004] ECR I-11349 the term ‘new born baby’ described the characteristics of dolls.

In relation to section 3(1)(c), the ECJ has stated that there is a much more stringent underlying public policy. Descriptive signs relating to the characteristics of goods or services in respect of which registration is sought may be used by all. Descriptive signs must therefore be left free for other traders to use, regardless of whether they might want to use them today or at some unspecified time in the future. The policy was first established in Cases C-108/97 and 109/97 Windsurfing Chiemsee Produktions und Vertriebs GmbH v Boots und Segelzubehor Walter Huber [1999] ECR I-2779, and has since been confirmed in Case C-191/01 P OHIM v Wm Wrigley Junior Co (DOUBLEMINT) [2003] ECR I-12447, at paragraphs 29–32.

Despite this stricter policy, section 3(1)(c) is applied in the same manner as section 3(1)(b). The tribunal will use the concrete test which considers the mark in relation to the goods or services through the eyes of the reasonable consumer, and asks what information does the mark convey to the consumer about the nature of the goods. (Case C-383/99 P Procter & Gamble Company v OHIM (BABY DRY) [2001] ECR I-6251at paragraphs 39–44). Where the mark consists of a number of elements, it is to be considered as a whole. Hence, in BABY DRY the ECJ considered that the mark (a combination of two known words) was ‘syntactically unusual’ because the normal way in English of referring to the characteristics of babies’ nappies would have been to refer to a ‘dry baby’. The case should now be treated with caution and confined to its facts in view of the DOUBLEMINT ruling above, where the ECJ made plain (at paragraph 32) that an application will be refused under section 3(1)(c) if at least one of the possible meanings of the mark designates a characteristic of the goods or services concerned. Further, where there is a new word (a ‘neologism’) which consists of a combination of known words, themselves descriptive, the new word must itself be looked at overall to see if it describes the goods: Case C-265/00 Campina Melkunie BV v Benelux-Merkenbureau (BIOMILD) [2004] ECR I-1699. The neologism will be refused registration unless the mark as a whole creates, both aurally and visually, an impression far removed from that produced by a simple combination: Case C-363/99 Koninklijke KPN Nederland NV v Benelux-Merkenbureau (POSTKANTOOR) [2004] ECR I-1619.

The viewpoint of the English consumer

Remember when applying ECJ case law to a United Kingdom trade mark application that the mark has to be considered from the viewpoint of the average English-speaking consumer. It must be considered overall, both aurally and visually. Thus in FROOT LOOPS Trade Mark [1998] RPC 240, the mark was not registrable because aurally it was directly descriptive of the characteristics of the goods, breakfast cereals, because it sounded like ‘fruit loops’. Conversely, ‘UltraPlus’ was registrable because it was a ‘syntactically unusual’ combination of words. Even though taken individually the component parts were descriptive, the overall mark was not the normal way that consumers would refer to microwave ovenware: Case T-360/00 Dart Industries Inc v OHIM [2002] ECR II-3867.

The word FROOT in FROOT LOOPS was spelled unusually, but the sound of the words is almost exactly the same as the properly spelled FRUIT LOOPS.


The application of the ‘average consumer’ test in relation to foreign descriptive words is illustrated by Case C-421/04 Matratzen Concord AG v Hukla Germany SA [2006] ECR I-2303. Here a Spanish court had sought guidance from the ECJ as to whether a word which was descriptive of the goods (mattresses) in German was registrable in Spain. The evidence was that most Spanish people did not know the meaning of the word ‘matratzen’ (‘mattress’ in German) and so would not view it as descriptive of the goods. The ECJ ruled that where a word which is descriptive of the characteristics of the goods in the language of Member State B (Germany) is sought to be registered in Member State A (Spain), it should not be refused registration unless consumers in Member State A are capable of identifying the meaning of the (foreign) word. In other words, the Court adopted the mantle of the average Spanish consumer to decide what information was conveyed about the product by the mark.

Geographical names

Section 3(1)(c) also comprises geographical names. The meaning of ‘geographical name’ was explained by the ECJ in Cases C-108/97 and 109/97 Windsurfing Chiemsee Produktions und Vertriebs GmbH v Boots und Segelzubehor Walter Huber [1999] ECR I-2779 at paragraphs 31–35. The phrase means that the name is currently associated in the minds of consumers with a place where the goods originate, either now or in the future. However, a ‘fanciful’ geographical name (such as ‘North Pole’ for bananas) can be registered because consumers are unlikely to believe that those goods originate from that location. In Case T-379/03 Peek & Cloppenburg KG v OHIM [2005] ECR II-4633 it was held that although there was a town called ‘Cloppenburg’, German consumers did not associate the name with the production of goods and/or services. It was therefore not a ‘geographical name’.

Marks consisting exclusively of customary signs

Last, section 3(1)(d) prohibits the registration of trade marks consisting exclusively of customary signs. The wording of the provision is quite precise. It is not concerned with whether the word etc. itself is common in everyday language, but whether it is common in the trade. Hence, in Wm Wrigley Jr Co’s Application (LIGHT GREEN) [1999] ETMR 214, an application to register the colour light green for confectionery was refused as the mark was already used extensively by other traders in that line of business.

The policy of paragraph (d) is the same as that of paragraph (c), that is protecting the interests of other traders: Case C-517/99 Merz & Krell GmbH & Co v Deutsches Patent- und Markenamt, (BRAVO) [2001] ECR I-6959. Likewise, the test to be applied is the same, namely the concrete test. The sign has to be assessed in relation to the goods or services of the application through the eyes of the relevant public: Case C-371/02 Björnekulla Fruktindustrier AB v Procordia Food AB [2004] ECR I-5791 (a case on the parallel provision in section 46(1)(c)). As was explained in STASH Trade Mark, 3 September 2004, Appointed Person, there must be clear evidence that by the application date the mark is used by third parties to such an extent that it has become customary (that is, ‘usual’) in the trade for the relevant goods or services. In STASH itself, evidence of two uses of the mark by third parties before the application date did not amount to customary use. Much will depend on the nature of the market. The amount of use required will be far less where the products are specialised than where they are bought by members of the public.

The Proviso to section 3(1)

Paragraphs (b), (c) and (d) are qualified by the proviso to section 3(1) which states that a mark will not be refused registration under any of those provisions if it has acquired distinctiveness through use before the application date. This is a major exception to these three objections (Cases C-108/97 and 109/97 Windsurfing Chiemsee Produktions und Vertriebs GmbH v Boots und Segelzubehor Walter Huber [1999] ECR I-2779). Its effect is best explained as the difference between nature and nurture (AD2000 Trade Mark [1997] RPC 168). A mark which is not inherently distinctive may nevertheless be registered if it is has become factually distinctive through use.


The factors to be considered in deciding whether a trade mark is factually distinctive (that is, that the mark tells the consumer that the goods originate from a particular undertaking) were listed by the ECJ in the Windsurfing Chiemsee case at paragraphs 45–51. Such use must be within the United Kingdom (which raises some interesting questions when the mark is used on a website which is not targeted at United Kingdom customers, see 800-FLOWERS Trade Mark [2002] FSR 191, CA). In view of the decision in Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273, such use may include promotional use. However, the key issue is whether a significant proportion of the relevant public consider that the sign has come to identify the product as originating from a particular undertaking. That the Windsurfing test is quite demanding is illustrated by Case T-16/02 Audi AG v OHIM [2003] ECR II-5167: here it was not enough for the applicant merely to file evidence showing how many cars had been sold or exported under the name TDI as that did not establish that consumers viewed it as a trade mark. The evidence of use to establish factual distinctiveness will vary depending on the nature of the trade mark, so that ‘non-standard’ marks will require greater evidence of use. This may pose particular difficulties where the mark has been used as part of the get up of the goods, for example a slogan which has been used alongside the principal trade mark for the product: Case C-353/03 Société des Produits Nestlé SA v Mars UK Ltd [2005] ECR I-6135, although the fact that the slogan has been used as a ‘secondary’ mark is not of itself a bar to registration.

SummarySection 3(1) of the TMA (based on Article 3 of the Trade Marks Directive) contains four paragraphs listing those absolute grounds for the refusal of registration which are of general application. Section 3(1)(a) may safely be regarded as tautologous and therefore not a separate ground of objection. The remaining three paragraphs contain independent but overlapping objections to the registration of a trade mark: it is enough to bar the application if any one of these applies. The paragraphs comprise, respectively:

u marks devoid of distinctive character

u descriptive and geographical marks

u marks which are common in the trade.

Each one has a different underlying policy justification. The test to be applied in each case is a concrete test, that is the tribunal will make an overall assessment of the mark in relation to the goods and/or services of the application through the eyes of the relevant consumer (under United Kingdom law, the average English-speaking consumer). All types of trade mark are to receive the same treatment under section 3(1). Each of these objections can be overcome by appropriate evidence of acquired factual distinctiveness. Such evidence must show that the public have come to regard the sign as indicating origin.

Activities 12.4–12.512.4 Go over your notes on the case law of the ECJ explaining section 3(1). For each

of paragraphs (b), (c) and (d), provide a statement of the underlying policy of the paragraph together with the relevant case(s) which are authority for that policy.

12.5 Read the decision of the ECJ in Windsurfing Chiemsee, particularly paragraphs 45−51. Then draw up a list of factors which are to be considered by a tribunal when deciding whether a trade mark has become factually distinctive.

12.3.3 Absolute grounds: specific provisionsThe remaining subsections of section 3 are, as indicated above, specific in their application. What you must remember is that even if an applicant can convince the Registrar that these provisions do not apply, then it will still be necessary to consider whether the trade mark is caught by the general provision in section 3(1).

Look up the case and make a note of what the slogan was.


Shape marks

Section 3(2), in paragraphs (a) to (c), prohibits the registration of signs consisting exclusively of shapes resulting from the nature of the goods themselves, shapes necessary to achieve a technical result and shapes which give value to the goods. These three paragraphs can be summed up as covering natural shapes, technical shapes and aesthetic shapes. The subsection applies only to three-dimensional marks, not two-dimensional picture marks: Re August Storck KG’s Trade Mark Application, Appointed Person, 9 October 2007.

It is generally agreed that section 3(2) is derived from the Benelux Uniform Trade Mark Act 1971. Strowel, in the article listed in the essential reading, gives useful examples of decisions under that legislation illustrating the three types of prohibited shapes. He also argues that as section 3(2) is a derogation from the very broad definition of ‘trade mark’ in section 1 (which includes shapes as a category of registrable sign) it should be interpreted narrowly.

The policy behind section 3(2) is the same as that behind section 3(1)(c), namely ensuring that certain shapes are left free for other traders to use (Case C-299/99 Philips Electronics NV v Remington Consumer Products Ltd [2002] ECR I-5475). So far, the only paragraph to have been considered in detail by the ECJ is (b). In Philips, the Court gave a relatively broad interpretation of the provision, rejecting the argument that it was irrelevant that the same technical result could be achieved by other shapes. The word ‘necessary’ in section 3(2)(b) was interpreted to mean ‘attributable’. In relation to aesthetic shapes, the only referral to date is Case C-371/06 Benetton Group SpA v G-Star International [2007] ECR I-7709 where the Court merely pointed out that acquired distinctiveness is irrelevant under section 3(2).

Subsequently, the ECJ has added that when dealing with shape marks, section 3(2) should be applied before section 3(1) which is an independent ground of objection (Cases C-53/01, 54/01 and 55/01 Linde AG, Winward Industries Inc & Rado Uhren AG [2003] ECR-I 3161). Section 3(2) is a preliminary obstacle to registration and, as noted above, one that cannot be overcome by evidence of acquired distinctiveness.

Even if the shape does not fall within any of the specific prohibitions in section 3(2), it still needs to be considered under section 3(1) to see if it is distinctive, descriptive or common to the trade. The most usual objection under section 3(1) to shape marks is that they are devoid of distinctive character. In Case C-238/06P Develey Holding GmbH v OHIM [2007] ECR I-9375 protection was denied to the rather ordinary appearance of a squeezable sauce bottle. Very unusual shapes may, exceptionally, be inherently distinctive, examples including Case T-128/01 DaimlerChrysler Corporation v OHIM [2003] ECR II-701 (a car radiator grill) and Case T-460/05 Bang & Olufsen A/S v OHIM [2007] ECR II-4207 (the shape of a loudspeaker). Overcoming the objection under section 3(1) by proof of acquired distinctiveness will not be easy. Sufficient evidence of use (complying with the Windsurfing Chiemsee criteria) must be produced to show that consumers recognise the shape as indicating origin. Consumers do not usually see shapes as trade marks: Bongrain’s Application [2005] RPC 306.

Activity 12.6Read the article by Strowel explaining the origin of section 3(2) of the TMA (Article 3(1)(e) Trade Marks Directive). Then:

a. give an example of each one of the three categories of shape listed in the provision

b. consider whether the approach of the ECJ in Philips v Remington accords with Strowel’s arguments.

Marks contrary to public policy or which are deceptive

Section 3(3)(a) (derived from Article 6quinquies of the Paris Convention 1883) prohibits the registration of trade marks which are contrary to public policy or morality. There are similar prohibitions against granting protection to offensive subject matter in patent and design law. The issue is not whether a section of the public considers

Quinquies is Latin for ‘Fifth’ as used in French language texts. ‘First’ to ‘Tenth’ are semel, bis, ter, quater, quinquies, sexies, septies, octies, novies, decies, etc.


the trade mark distasteful, but whether it would cause outrage as being likely significantly to undermine current religious, family or social values: Re Ghazilian’s Trade Mark Application [2001] RPC 654. The outrage or censure must occur among an identifiable section of the public. A higher degree of outrage among a small section of the community may well suffice. Each case must be decided on its own facts. Recent examples of refusal on public policy grounds include ‘standupifyouhatemanu.com’, Trade Marks Registry, 20 November 2002 (incitement to football violence) and JESUS Trade Mark Application [2005] RPC 611 (likely to cause offence to a significant section of the public). By contrast, in Woodman v French Connection UK Ltd, Registry, 20 December 2005, an attempt to have the mark FCUK declared invalid as being contrary to section 3(3)(a) failed. Although there had been complaints to the Advertising Standards Authority that the mark was too close to a particular expletive, there was no evidence to suggest that FCUK-branded goods had themselves caused outrage. Any offence that had been caused had not been as a result of the use of the mark itself, but rather by the context in which an individual trader had chosen to use the letters in promotional material.

Within the same provision, section 3(3)(b) prohibits the registration of trade marks which are deceptive to the public, for example as to the nature of the goods. The particular problem here is that the choice of a known word as a trade mark creates a trap for the applicant. As explained in ORLWOOLA Trade Mark (1909) 26 RPC 683, 850, if the goods possess the characteristics described by the known word (here the goods were textiles) then the mark is unregistrable as being totally descriptive, but if the goods do not possess those characteristics, then the mark is deceptive. The assessment of deceptiveness under section 3(3)(b) is effected through the eyes of the reasonably well-informed, observant yet circumspect consumer who is used to ‘hype’ (Kraft Jacobs Suchard Ltd’s Application (KENCO THE REAL COFFEE EXPERTS) [2001] ETMR 585).

The ECJ has explained the meaning of ‘deceptive’ in Case C-259/04 Emanuel v Continental Shelf 128 Ltd [2006] ECR I-3089. E was a famous fashion designer whose reputation increased dramatically when she designed the Princess of Wales’ wedding dress in 1981. A trade mark consisting of her name and a logo had been registered in 1994. As a result of financial difficulties, she had assigned her business to a company in 1996, becoming an employee of the business. Thereafter, there were successive transfers of the business which ultimately was owned by the defendant. In the meantime, the applicant had resigned from the business. The defendant’s predecessor had applied to register further marks consisting of the applicant’s name. She opposed these applications under section 3(3)(b) and sought revocation of the earlier mark under s46(1)(d) on the ground that it had become deceptive as to the origin of the goods. The ECJ ruled that the word ‘deceive’ in Article 3 referred to the intrinsic characteristics of the trade mark. The sign must objectively deceive the public by virtue of its qualities. Where a mark was a person’s name and had been assigned as part of the business, it did not deceive the public even if it created the mistaken impression that that person took part in the creation of the goods for which the mark was used.

Marks contrary to law and specially protected emblems

Section 3(4) and (5) may conveniently be taken together. The two subsections, respectively, prohibit the registration of trade marks which are contrary to United Kingdom or EU law and trade marks consisting of or containing specially protected emblems. The former includes trade marks which breach United Kingdom legislation such as the Trade Descriptions Act 1968, Plant Varieties Act 1997 and Hallmarking Act 1973 or EU secondary legislation such as that which protects geographical indications (e.g. the name ‘Champagne’). A recent example under domestic law is the London Olympic Games and Paralympic Games Act 2006. The latter cross-refers to detailed provisions in section 4, dealing with such matters as the Royal Coats of Arms, words indicating royal patronage, national flags, and the flags and emblems of international organisations.


Marks obtained in bad faith

Finally, section 3(6) prohibits the registration of a trade mark to the extent that the application was made in bad faith. ‘Bad faith’ has been considered by the Court of Appeal in Harrison v Teton Valley Trading Co [2004] 1 WLR 2577 (CHINA WHITE). Here it was said that the objection is only available in limited circumstances, where the applicant’s conduct amounts to dishonesty or where the applicant’s conduct falls short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the area in question. The test involves a mixture of the subjective and objective: there must be a realisation by the applicant that what he was doing would be regarded by honest people as having been done in bad faith.

An example of bad faith would be applying for a mark knowing that it is another’s (MICKEY DEES (NIGHTCLUB) Trade Mark [1998] RPC 359). However, there is no bad faith where there is a degree of uncertainty as to entitlement: Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] RPC 367. It is not necessary to show that the applicant thought that what he was doing was dishonest: AJIT WEEKLY Trade Mark [2006] RPC 633, Appointed Person.

‘Bad faith’ has now been considered by the ECJ in Case C-529/07 Chocoladefabriken Lindt & Sprungli AG v Franz Hauswirth GmbH, ECJ, 11 June 2009. Although the Advocate General, Eleanor Sharpston, had provided a comprehensive review of the meaning of the phrase, the Court’s ruling provides little clear guidance. Instead, the Court simply lists the factors to be taken into account and leaves the matter to be determined by the national court.

SummaryThe remaining absolute grounds in sections 3(2) to 3(6) of the TMA cover, in order, public policy restrictions on the registration of shape marks; trade marks which are contrary to public policy or which are deceptive; trade marks the registration of which is prohibited by United Kingdom or EU Law; trade marks which contain specially protected emblems; and trade marks applied for in bad faith. None of these specific objections can be overcome by evidence of acquired distinctiveness.


u explain how the absolute grounds for the refusal of registration of a trade mark have been interpreted by the ECJ, including the policy underlying these grounds (where such policy has been explained by the Court).

12.4 Relative grounds for refusal


Revocation, and Invalidity, Property Rights and Registration’ pp.702–20.

¢ Bently and Sherman, Chapter 38: ‘Relative Grounds for Refusal’ pp.857–92.


¢ Norman, Chapter 14: ‘Registration of Trade Marks’ section 14.5


¢ Cases: C-291/00 LTJ Diffusion SA v Sadas Vertbaudet SA [2003] ECR I-2799; Case C-251/95 Sabel BV v Puma AG [1997] ECR I-6191; Case C-39/97 Canon KK v Metro-Goldwyn-Mayer Inc [1998] ECR I-5507; Case C-342/97 Lloyd Schuhfabrik Meyer & Co KG v Klijsen Handel BV [1999] ECR I-3819; Case C-375/97 General Motors v Yplon [1999] ECR I-5421; Oasis Stores Ltd’s Trade Mark Application [1998] RPC 631; Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd, ECJ, 27 November 2008; Case C 487/07 L’Oréal SA v Bellure NV, ECJ, 18 June 2009.


Useful further reading: ¢ Bornkamm, J. ‘Harmonising Trade Mark Law in Europe: the Stephen Stewart

Memorial Lecture’ [1999] IPQ 283.

12.4.1 Overview of relative groundsRelative grounds are concerned with the external characteristics of the trade mark. The mark is to be compared with prior rights (earlier registered and unregistered trade marks, designs and copyright). If there is a conflict, then the trade mark application will be refused, unless the owner of the earlier right consents, such consent being conclusive (section 5(5)). The provisions on relative grounds are (in the main) a mirror image of the provisions on infringement so the case law is interchangeable. When we consider infringement (in Chapter 13) you will be asked to return to this chapter for many of the important points. Yet again, there is much ECJ case law on relative grounds. As with absolute grounds, the key issues are judged through the eyes of the reasonable, well-informed and circumspect consumer.

To repeat a point made at the start of this chapter, the effect of The Trade Marks (Relative Grounds) Order 2007 (SI 2007/1976) is that relative grounds are no longer the subject of examination by the Trade Marks Registry. Instead, the Registry will conduct a search of earlier registered rights and will notify the applicant of the results, but will do no more than this. When the application is published, the Registry will inform the owners of any United Kingdom registered marks identified in the examination report. It is entirely up to the owner of the earlier right to oppose the application: if they do not do so, the mark will proceed to registration, although the owner of the earlier right has a period of five years to commence proceedings for invalidity (see further Chapter 13).

12.4.2 What are prior rights?The list of prior rights (set out in Article 4 of the Trade Marks Directive) is to be found principally in section 6 of the TMA, but also in section 5(4). To summarise a fairly lengthy list, prior rights comprise:

u earlier registered marks having effect in the United Kingdom as a result of being either national, EU or international registrations

u pending applications for national, EU or international registrations, provided they mature to registration

u subsequent EU registrations claiming seniority from earlier United Kingdom or international registrations

u well-known trade marks entitled to protection under the Paris Convention

u recently lapsed registrations

u earlier used but unregistered marks (provided these are capable of protection under passing off)

u earlier copyrights, or registered or unregistered designs.

12.4.3 Prior trade mark registrationsThe relative grounds for refusal of registration based on prior trade mark registrations are to be found in section 5(1) to (3) TMA. Read these three subsections now. These provisions have been called by Bornkamm ‘the triad of protection’. Each provision has specific criteria, and they must be applied in sequence: Reed Executive plc v Reed Business Information Ltd [2004] RPC 767 (CA). In other words, one considers whether the application is barred under section 5(1); if not, then one considers section 5(2); and lastly one considers section 5(3).


Identity

Under section 5(1), an earlier registration of the identical mark for identical goods or services will bar the application. This can be considered ‘double identity’. Protection is absolute and no likelihood of confusion need be proved, as it is assumed that there will be consumer confusion where there is total identity of marks and goods: Case C-2/00 Hölterhoff v Ulrich Freiesleben [2002] ECR I-4187. ‘Identical goods’ means the goods for which the senior mark is actually registered, so that if the goods are not identical, the case falls under section 5(2) (British Sugar v James Robertson [1996] RPC 281). The statement of goods and services on the application form in respect of the junior mark must be compared with the entry on the register for the senior mark. ‘Identical sign’ requires a comparison of the junior mark with the entry of the senior mark on the register: Philips Electronics NV v Remington Consumer Products [1998] RPC 283 at 312. If the registered mark consists of a word, the typeface or style of lettering is irrelevant, because what is registered is the word itself: Bravado Merchandising v Mainstream Publishing [1996] FSR 205.

The test for what is an identical sign has been explained by the ECJ in Case C-291/00 LTJ Diffusion SA v Sadas Vertbaudet SA [2003] ECR I-2799 at paragraphs 50 to 54. Because of the absolute protection afforded by section 5(1) (and indeed its counterpart in infringement, section 10(1)), ‘identity’ must be strictly interpreted and requires that the two marks be the same in all respects. For a junior mark to be identical to a senior mark, it must reproduce, without any modification, all the elements of the latter. However, the Court added that the comparison (which must be an overall comparison) is to be made through the eyes of the well-informed, reasonably observant and circumspect consumer who will rarely have the opportunity to compare the two marks side by side. Consequently, insignificant differences may go unnoticed.

The ECJ did not elaborate on what it meant by ‘insignificant differences’. On the facts of the case itself, the addition of a dot was thought to be insignificant. But what if the junior mark is DIGITS when the senior mark is DIGIT, or PELIKAN when the senior mark is PELICAN? Would the average consumer notice the difference? Further guidance will be required from the Court on this point.

Remember, identity of marks is subjected to an overall assessment by the consumer. If the senior mark is contained within the junior sign but surrounded by ‘non trade mark matter’, the surrounding non-trade mark matter can be ignored, because the consumer would not consider this to contain a ‘trade mark message’ (Reed Executive plc v Reed Business Information Ltd [2004] RPC 767). However, if the surrounding matter does have a ‘trade mark message’, then at best the two marks are similar.

Similarity coupled with confusion

If the signs are not identical (for example, as in the Reed case where the registered mark REED was not identical to REED ELSEVIER), one moves on to section 5(2) which involves different criteria.

Section 5(2) prohibits the registration of a junior application if it consists of the same or similar mark and is to be registered in respect of the same or similar goods or services, provided there exists a likelihood of confusion on the part of the public, ‘which includes a likelihood of association’. The permutations encapsulated in section 5(2) are set out below (you don’t need to worry about memorising this list; it is merely here to help you appreciate the width of the section).

The scope of section 5(2)

Where the earlier mark is protected in respect of goods, it will block a later application for:

u an identical mark for similar goods

u an identical mark for similar services

u a similar mark for identical goods


u a similar mark for similar services

u a similar mark for similar goods.

Where the earlier mark is protected in respect of services, it will block a later application for:

u an identical mark for similar services

u an identical mark for similar goods

u a similar mark for identical services

u a similar mark for similar goods

u a similar mark for similar services.

The meaning of confusion

The key requirement of section 5(2) is that there must be a likelihood of confusion ‘which includes a likelihood of association’. Case law has identified that there may be three types of confusion on the part of a consumer.

u Direct confusion (where the consumer confuses one product with another).

u Indirect confusion (where the consumer thinks that the goods come from economically linked undertakings or that the trade mark owner has expanded their product line).

u Mere association (where the consumer ‘calls the trade mark to mind’ but without being confused).

The inclusion of ‘likelihood of association’ in the Trade Marks Directive, and hence in the TMA, is said to be as a result of the wording of the Uniform Benelux Trade Marks Act 1971 and cases decided thereunder, such as MONOPOLY v ANTI-MONOPOLY [1978] BIE 39 and 43, where it was held that adopting the name ‘Anti-Monopoly’ for a board game would not confuse customers but would make them think of ‘Monopoly’ and would therefore injure (by dilution) the reputation of the senior mark.

The interpretation of section 5(2) (and also 10(2)) was discussed by Laddie J in Wagamama Ltd v City Centre Restaurants [1995] FSR 713. He concluded, applying normal rules of interpretation, that ‘likelihood of association’ was included within the notion of ‘likelihood of confusion’. At the same time, Laddie J rejected all arguments that the Benelux meaning of association should be incorporated into United Kingdom law.

The approach of the ECJ to ‘likelihood of confusion’ was first stated in Case C-251/95 Sabel BV v Puma AG [1997] ECR I-6191. Up to a point it endorses the Wagamama thinking, but in many respects goes far beyond it. The Court declared, from an analysis of the wording of Article 4, Trade Marks Directive, that association was not an alternative to confusion but ‘serves to define its scope’ (paragraph 18). It later confirmed that simply ‘calling the trade mark to mind’ does not suffice for the purposes of establishing a likelihood of confusion under sections 5(2) and 10(2) (Case C-425/98 Marca Mode CV v Adidas AG and Adidas Benelux BV [2000] ECR I-4861) so that only direct and indirect confusion will suffice.

It should not be assumed that association is totally irrelevant. The ECJ’s phrase in Sabel v Puma (‘serves to define its scope’) suggests that the mental processes undergone by the confused consumer when seeing a mark similar to the registered mark are important. Association is involved in the assessment of confusion because of the wording of Recital 11 to the Trade Marks Directive in its 2008 version (explained next). It is also relevant to the concept of indirect confusion, and to the ECJ’s ‘global appreciation’ test used to determine the likelihood of confusion (explained below). Further, ‘association’ is important in the dilution provision in section 5(3). When considering the role of association, you need to remember that all the issues are judged through the eyes of the average consumer, who is deemed to be reasonably well-informed and reasonably observant and circumspect, although s/he rarely has the chance to make a direct comparison between the different marks but must place his/


her trust in the imperfect picture of them. The average consumer’s level of attention is likely to vary according to the category of goods or services in question: think about the different attention spans of someone buying goods in a supermarket and someone buying a new car.

The application of section 5(2)

When applying section 5(2), the starting point is Recital 11 of the consolidated version of the Trade Marks Directive. It provides that the appreciation of confusion depends on numerous elements, in other words, it is a question of fact in every case. Recital 11 refers to four things to be taken into account (there may be others) namely, the recognition of the trade mark on the market, the association which can be made with the used or registered sign, the degree of similarity between the trade mark and the sign, and between the goods or services identified. Note how two of these are concerned with the consumer’s perception (‘the recognition of the trade mark on the market’ and ‘the association which can be made with the used or registered sign’). The following is a suggested way of organising the issues when applying section 5(2).

Similarity of marks

As a pre-condition to the application of section 5(2), there must be at least some similarity between the senior and junior mark: Case 106/03 P Vedial SA v OHIM [2004] ECR I-9573. If there is no such similarity, then the senior mark has no protection.

First, it should be asked whether the junior mark is identical or similar to the senior mark. Identity involves the application of the test in LTJ explained above. Similarity depends on an aural, visual and conceptual comparison based on the overall impression given by the marks, bearing in mind their distinctive components (Case C-251/95 Sabel BV v Puma AG [1997] ECR I-6191 at paragraph 23). In other words, how do the two marks sound, how do they look and what is their underlying idea? The Court in Sabel added that ‘the perception of marks in the mind of the average consumer of the type of goods or services in question plays a decisive role in the global appreciation of the likelihood of confusion. The average consumer normally perceives a mark as a whole and does not proceed to analyse its various details.’ The Court’s advice on how to determine similarity of marks was heavily influenced by cases decided under the Benelux Uniform Trade Mark Law 1971 (see in particular Union v Union Soleure, 20 May 1983, Case A 82/5 [1984] BIE 137).

Two cases illustrate the application of the test in Sabel. In Case T-112/06 Inter-Ikea Systems BV v OHIM (IKEA/IDEA), 16 January 2008, (General Court) it was said that the average consumer here would be very attentive as furniture (the goods in question) would only be bought after a period of reflection. When comparing the marks visually, the Court noted that the junior mark had a very dominant figurative element, while the senior mark consisted of just a single word. There was only a low degree of aural similarity because even though the sequence of vowel sounds were the same, the consonants ‘d’ and ‘k’ were spoken very differently, using different parts of the mouth. Last, there was no conceptual similarity, since the word ‘idea’ was a word generally understood by the European public while ‘ikea’ was a neologism with no obvious meaning and therefore no associations. In Case C-120/04 Medion AG v Thomson Multimedia Sales [2005] ECR I-8551 the ECJ offered advice on how LIFE (the senior mark) should be compared with THOMSON LIFE when both marks were used on electronic goods. It said that overall assessment of the two marks would make the notional consumer think that the owner of LIFE had expanded its business, leading to indirect confusion. It didn’t matter that LIFE was not the dominant part of THOMSON LIFE. To require that the senior mark formed the dominant part of the junior mark would in effect deny protection to the senior mark.

Distinctive components

In Case C-342/97 Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [1999] ECR I-3819 at paragraphs 22–23 the Court explained what it meant by ‘the distinctive components’ of a mark. The national court, it said, must make an overall assessment of the greater or lesser capacity of the mark to identify the goods or services for which it has been


registered, taking particular account of the marks’ inherent characteristics, whether or not it contains a descriptive element, the market share held by the mark, how intensive, geographically widespread and long-standing the use of the mark has been, the amount invested by the undertaking in promoting the mark, the proportion of the relevant section of the public which, because of the mark, identifies the goods or services as originating from a particular undertaking, and statements from chambers of commerce and industry or other trade and professional associations (in case this list sounds familiar, reread the list of factors to be taken into account when determining factual distinctiveness under the Court’s ruling in Windsurfing Chiemsee).

An example of similar marks

As an example of how marks may be held similar, consider the decision in Neutrogena v Golden Ltd t/a Laboratoires Garnier [1996] RPC 473 where Jacob J held that NEUTRALIA was similar to NEUTROGENA (both marks being for skin care products): the prefix ‘neutra’ conveyed the idea to the average shopper that the goods were kind to the skin; the average shopper would tend to ignore the second part of each word, and would certainly not make a detailed comparison between the two names.

Similarity of goodsNext, once it is shown that the marks are similar (or at least not dissimilar), it must decided whether the goods are similar. The test to be applied here is that in Case C-39/97 Canon KK v Metro-Goldwyn-Mayer Inc [1998] ECR I-5507. At paragraph 23, the ECJ stated that all relevant factors must be taken into account, including the nature of the goods, the end users, the method of use and whether the goods are in competition with each other or are complementary. We may add that the fact that the goods of both marks appear in the same class within the Nice Classification of Goods and Services 1957 is of no assistance, as the classification is there for administrative purposes; in any case, many of the classes are very wide, comprising diverse products. The Canon test depends entirely on the facts of each case.

The test in Canon should be contrasted with the approach adopted in British Sugar v James Robertson [1996] RPC 281, where Jacob J updated the test in Jellinek’s Application (1946) 63 RPC 59. Though the tests are similar, the one in British Sugar is narrower as it asks whether the goods are in competition with each other (i.e. one could be substituted for the other), which is not the same as asking whether the goods are complementary. ‘Complementary goods’ (e.g. pasta and pasta sauce) are an example of indirect confusion.

The ‘global appreciation’ test

Having compared the two marks and their respective goods and services, the last step in determining likelihood of confusion is to apply the ‘global appreciation’ test laid down by the ECJ in Sabel and Canon. As the Court stated in the former ruling, ‘likelihood of confusion’ requires the application of interdependent factors. If the two marks are conceptually similar, and the senior mark has a particularly distinctive character, either per se or because of the reputation it enjoys with the public, then there may be a greater likelihood of confusion. On the other hand, if (as in Sabel itself) the senior mark has hardly been used, and is one of many on the register with the same underlying idea (e.g. a wild cat), then the chances of confusion are far lower. The interdependence of factors point was emphasised in Canon, where the Court said that a lesser degree of similarity between the goods and services could be offset by a greater degree of similarity between the marks and vice versa. In that case, although the goods were not particularly similar (photographic equipment versus video cassettes), because the senior mark was inherently strong, had been extensively used and promoted, and because the two marks were very close (CANON versus CANNON) there was a likelihood of confusion. As the Court put it in Case C-342/97 Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [1999] ECR I-3819 the strength of the senior mark may have the effect of making dissimilar goods similar, or the closeness of the goods may make the sign more similar to the senior mark.


The ‘global appreciation’ test must be contrasted with that applied by United Kingdom courts in the early days of the TMA. In British Sugar v James Robertson [1996] RPC 281, it was held that ‘likelihood of confusion’ was only to be considered after it had been established (as separate and discrete steps) that the goods and the marks were similar. It assumed only notional and fair use of the application and the registered mark. This ‘sterile’ test (there was no interdependence of factors) was based on the decision Smith Hayden & Co Ltd’s Application (1946) 63 RPC 71 under the 1938 Act and took no account of the distinctive character (whether inherent or acquired) of the senior mark. Since Sabel and Canon, there has been a gradual acceptance of the ECJ’s more flexible approach: an example of the use of these cases by the United Kingdom Trade Marks Registry can be found in BALMORAL Trade Mark [1999] RPC 297. In Reed Executive plc v Reed Business Information Ltd [2004] RPC 767 the Court of Appeal accepted that in the case of a used trade mark, the circumstances surrounding such use must be taken into account when determining confusion.

Dilution

The last limb of the ‘triad of protection’ is to be found in section 5(3). This was amended by SI 2004/946 The Trade Marks (Proof of Use) Regulations 2004 and you should check that your statute book and textbook refer to the current version of the section. This amendment was as a result of the interpretation accorded to the optional Article 4(4)(a) and Article 5(2) of the Directive (both of which require the senior mark to be registered for dissimilar goods and services) by the ECJ’s rulings in Case C-292/00 Davidoff & Cie SA and Zino Davidoff v Gofkid Ltd [2003] ECR I-389 and Case C-408/01 Adidas-Saloman AG and Adidas Benelux BV v Fitnessworld Trading Ltd [2003] ECR I-12537. These were to the effect that there would be a gap in the scheme of protection if the owner of a mark with a reputation could object to the registration of a junior mark if the goods were dissimilar but could not object if they were similar where there was no likelihood of confusion.

Read section 5(3) again now. You will see that an earlier registration of the identical or similar mark will bar the application where the earlier mark has acquired a reputation and the use of the later mark without due cause would take unfair advantage of or be detrimental to the distinctive character or repute of the earlier mark. This introduces the doctrine of dilution into the law of registered trade marks in the United Kingdom (although similar protection had already been accorded in passing off, as discussed in Chapter 11). From our discussion of trade mark function in Chapter 10, you should remember that dilution of a trade mark can mean the ‘blurring’ of the product identification of the mark by its use on dissimilar goods or services, the ‘tarnishing’ of its image by its use on an unwholesome product or taking unfair advantage of the success of the earlier mark to promote the goods or services of the junior mark.

The criteria in section 5(3) are totally different from those found in section 5(2) (Sabel v Puma), as each provision pursues a different objective. Section 5(3) contains a composite test of which all the elements must be satisfied.

First, the junior mark must be identical or similar to the senior mark (applying either LTJ or Sabel respectively to decide the issues of identity and similarity). When comparing the senior and junior marks under section 5(3), the ECJ has said in Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd, ECJ, 27 November 2008 and Case C 487/07 L’Oréal SA v Bellure NV, ECJ, 18 June 2009 that the similarity must be such that the relevant section of the public makes a connection between the sign and the mark, that is to say, establishes a link between them without confusing them. However, the existence of such a link on its own is not sufficient: there must be injury to the mark. Whether there is a link (i.e. whether the consumer ’calls to mind‘ the senior mark) is to be assessed globally, taking into account the degree of similarity between the conflicting marks, the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services and the relevant section of the public, the strength of the earlier mark’s reputation, the degree of the earlier mark’s distinctive character, whether inherent or acquired through use, and the existence of the likelihood of confusion on the part of the public.


Next, it will be necessary to prove the reputation of the earlier mark. ‘Reputation’ was explained by the ECJ in Case C-375/97 General Motors Corporation v Yplon SA [1999] ECR I-5421 as meaning that the mark must be ‘known’ by a significant number of the relevant public (i.e. the consumers of the product concerned), although it is not necessary to show that a given percentage recognise the mark. ‘Known’ is a less onerous requirement than the mark being ‘famous’ or even ‘well known’. The ECJ in General Motors listed the factors to be taken into account by the national court when determining whether a mark has a reputation. These are: the market share held by the trade mark; the intensity, geographical extent and duration of its use; and the size of the investment made by the undertaking in promoting it. (Again, you should compare this list with the lists in Windsurfing Chiemsee and Lloyd.)

Lastly, the use by the junior mark must be without due cause and must take unfair advantage of or be detrimental to the distinctive character or repute of the senior mark. The meaning of ‘due cause’ was considered in Pfizer Ltd v Eurofood Link (UK) Ltd [2001] FSR 17 and Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767. Both cases agree that the burden of proving ‘due cause’ is on the owner of the junior mark (which saves the owner of the senior mark having to prove a negative). In Premier Brands, Neuberger J debated (obiter) whether ‘absence of due cause’ meant ‘necessity’ or ‘bad faith’: on balance he inclined to the former.

In Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd at [27] and in Case C 487/07 L’Oréal SA v Bellure NV at [38], the ECJ identified three types of harm which can be caused to the senior mark. Any one of these suffices, but in each case the question of harm must be assessed globally. The types of harm are:

u detriment to the distinctive character of the mark (‘whittling away‘ or ’blurring‘): the mark’s ability to identify the goods or services for which it is registered is weakened due to the ’dispersion of identity’

u detriment to the repute of the mark (‘tarnishment‘ or ’degradation‘): the goods or services for which the identical or similar sign is used are perceived by the public in such a way that the trade mark’s power of attraction is reduced, particularly where the third party’s goods or services possess a characteristic or quality which is liable to have a negative impact on the image of the mark

u taking unfair advantage (‘parasitism‘ or ’free-riding‘): the third party seeks by their use of the senior mark to ride on its coat-tails in order to benefit from the power of attraction, the reputation and prestige of the mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor in order to create and maintain the mark’s image.

However, whichever category of harm applies, its net effect must be to make the consumer change their economic behaviour. Change of economic behaviour is illustrated by Quorn Hunt v Marlow Foods Ltd [2005] ETMR 105, where it was held that QUORN for vegetarian meat substitute would be tarnished by being associated with a hunting organisation. On seeing the defendant’s mark, consumers would change their economic behaviour (i.e. they would be put off from buying the opponent’s goods).

A useful illustration of the application of section 5(3) can be found in Oasis Stores Ltd’s Trade Mark Application [1998] RPC 631. Here, the proprietor of EVER READY for batteries unsuccessfully opposed the registration of EVEREADY for condoms. The Appointed Person stated that section 5(3) is not intended to have the sweeping effect of preventing the registration of any mark which is the same as, or similar to, a trade mark with a reputation. It is a matter of degree depending on a number of factors. Examples of successful oppositions under section 5(3) include C A Sheimer (M) Sdn Bhd’s Trade Mark Application (VISA) [2000] RPC 484 (VISA for credit cards would be tarnished if allowed to be registered for condoms) and Inlima SL’s Application for a Three Dimensional Trade Mark [2000] RPC 661 (the Adidas ‘three stripe’ mark for sports goods would be harmed if the applicant’s were allowed to register a bottle shaped like a football boot, etched with three stripes, for beer).


Activities 12.7–12.812.7 Read the decision in Oasis Stores Ltd’s Trade Mark Application. What does the

Appointed Person say are the criteria to be taken into account when a trade mark application is opposed under section 5(3).

12.8 Go over your notes on sections 5(1), 5(2) and 5(3). Then complete the chart below by inserting the relevant judicial definitions of the key phrases and providing the names of the relevant authorities for each definition.

Element Definition Authority

identity of marks

similarity of marks

similarity of goods

global appreciation

reputation


12.4.4 Conflict with an earlier unregistered markIn section 5(4)(a), the United Kingdom implemented one of the optional provisions of the Directive by enabling the owner of a prior used but unregistered mark to oppose a later trade mark application. Oppositions under this subsection rarely succeed, because the opponent must convince the Registry that they would be likely to succeed in a passing off action: WILD CHILD Trade Mark [1998] RPC 455. An example of an unsuccessful opposition is OXFORD BLUE Trade Mark, Registry, 23 March 2004, where Oxford University failed in its attempt to prevent the registration of OXFORD BLUE for cheese. Although the term OXFORD BLUE was known to the public as a sporting award, there was no evidence that the University had traded under that name, and hence there was no goodwill to protect.

12.4.5 Conflict with an earlier copyright or designUnder section 5(4)(b), the owner of an earlier copyright or design can oppose a trade mark application. There may be a conflict between the trade mark and an earlier two-dimensional artistic work (see KARO STEP Trade Mark [1977] RPC 59) or between a shape trade mark and an earlier three-dimensional artistic work or registered or unregistered design (OSCAR Trade Mark [1979] RPC 173). As music can be a trade mark (Shield Mark BV v Joost Kist [2003] ECR I-14313), there could now be a conflict between the owner of the copyright in the tune and a trade mark applicant.

SummaryRelative grounds for refusal of registration (which may be raised either by the Registrar or by an opponent) concern the relationship between the mark applied for and prior rights. Such prior rights are primarily earlier registered marks, but can include unregistered marks and earlier copyrights and designs. With regard to earlier registered rights, sections 5(1) to (3) provide what has been called the ‘triad of protection’. Each subsection contains its own specific criteria and the provisions must be applied in sequence. The ECJ has provided extensive guidance as to the meaning of key words and phrases in Article 4 of the Trade Marks Directive (the parent provision) in particular ‘identical mark’, ‘similar mark’, ‘similar goods’, ‘likelihood of confusion’, ‘likelihood of association’ and ‘reputation’. The Court’s case law confers broad protection on marks which have inherent or acquired distinctiveness or which have acquired a reputation among a significant section of consumers. The role of the average consumer in determining the issues of identity, similarity and confusion is crucial.



u explain how the relative grounds for refusal of registration of a trade mark inter-relate and how they are to be applied, using the case law of the ECJ to support your explanation

u list the points which must be satisfied before a trade mark can be entered on the United Kingdom Trade Marks Register.

Sample examination questionsQuestion 1 Consider whether EACH of the following could be registered under the provisions of the Trade Marks Act 1994.

a. The sound of bird song for breakfast cereal.

b. The colour red for fire extinguishers.

c. Soap in the shape of a heart.

d. KILLER for clothing.

Question 2 ‘Likelihood of association has no role to play in determining the scope of the trade mark owner’s monopoly.’

Explain and comment critically on this statement.

Question 3 Consider the following in the context of sections 5 and 6 of the Trade Marks Act 1994

a. An application to register PHARMATIN for analgesic preparations when PHARMATON is already used and registered in respect of vitamin capsules.

b. An application to register DAILY for dried milk when DAISY is already used and registered in respect of margarine.

Advice on answering the questionsQuestion 1 A good answer should tackle each part of the question systematically, as follows.

a. Sound marks. These should first be considered under Article 2 section 1. Are they a ‘sign’ (Sieckmann) (they appeal to the senses) and are they capable of distinguishing (in principle a sound could be a trade mark)? However, the key issue is one of graphic representation under Sieckmann as applied to sound marks by the Shield Mark decision. A good answer will explain and apply what was said in Sieckmann. Assuming graphic representation is possible here, would the mark be met by any Article 3/section 3 objections? Would it be devoid of distinctive character (is it inherently distinctive – do consumers perceive sounds as trade marks) or would it be descriptive? What has the ECJ said about the meaning of those phrases? Could these objections be overcome by evidence of factual distinctiveness? What does Windsurfing Chiemsee say about this? What would need to be proved? How much evidence would be needed?

b. Colour marks. Again the discussion should begin with Article 2 section 1 and the issues of ‘sign’, ‘graphic representation’ and ‘capable of distinguishing’. In relation to graphic representation, the ECJ ruling in Libertel should be discussed: has the particular shade of red been indicated by use of the Pantone system or similar? Under section 3, would this mark be devoid of distinctive character: do consumers see colours as trade marks? (Here, would red simply indicate danger?) Would it be descriptive, for example, of a particular type of fire extinguisher? Might it not be common to the trade? Again, what sort of evidence of use would be needed to overcome these objections? Even if they could be overcome, what about an objection that the mark is deceptive?

c. Shape marks. These are mentioned in Article 2/section 1 as being potential trade marks (though care should be taken with the graphic representation – Swizzels Matlow). Applying section 3(2) first (Linde), is this a shape resulting from the nature


of the goods or could soap be any shape? Is it a shape necessarily attributable to a technical result (Philips)? Is it a shape which adds substantial value to the goods? In the last instance the question to be asked is not whether the branded goods cost more but whether consumers buy the product for its shape alone or for some other reason (presumably, here, to wash) (you should refer to the arguments in the Strowel article). Even if the shape escapes refusal under section 3(2), it is still necessary to see if there are objections under section 3(1). Paragraphs (b), (c) and (d) (together with relevant ECJ case law as summarised by the Court of Appeal in Bongrain) should be discussed in detail. Do consumers normally see shapes as trade marks? What sort of evidence of factual distinctiveness would be needed under the proviso?

d. Word marks. KILLER: as a word mark there should be no problem with Article 2/section 1. Applying the concrete test of section 3(1), would the average consumer perceive this as a trade mark or think that it describes the goods or is common in the trade? Unlikely. The difficulty here is section 3(3)(a) and objections on the grounds of public policy, as discussed in Ghazilian. The Appointed Person’s views in Ghazilian should be explored. If there is an objection under 3(3)(a), acquired distinctiveness would not help.

From the above, you can see that the systematic approach involves a discussion of section 1 (where appropriate – i.e. ‘non-standard’ trade marks), followed by a detailed examination of section 3(1)(b), (c) and (d), followed by a discussion of what would be necessary to satisfy the proviso on acquired distinctiveness, with an appropriate selection of other grounds of objection in section 3. In the case of shape marks, section 3(2) is to be considered before section 3(1).

Question 2 A good answer will:

u explain the context in which the phrase ‘likelihood of association’ occurs (Articles 4(1) and 5(1) of the Directive, sections 5(2) and 10(2) TMA) and its origin in Benelux law

u explain its relationship with ‘likelihood of confusion’ and the types of confusion which can occur

u discuss the cases of Wagamama and Sabel v Puma and the conclusions reached in each one

u consider the role of ‘association’ in the application of section 5(2), namely the effect of Recital 10, the concept of indirect confusion, and the global appreciation test in Sabel and Canon

u consider the role of ‘association’ in the application of section 5(3).

u link the above material to the functions performed by trade marks and by the discussion thereof in Arsenal v Reed (see Chapter 10).

Question 3 A good answer will apply sections 5(1), 5(2) and 5(3) systematically to the two parts of the question, making effective use of the ECJ’s guidelines on the interpretation of key words and phrases in those provisions. Are the marks identical and for identical goods or services (what does identical mean under LTJ)? If section 5(1) does not apply, consider section 5(2): are the marks similar (applying the three-fold test in Sabel for similar marks), are the goods similar (applying the test in Canon rather than that in British Sugar) and is there a likelihood of confusion? What does confusion mean? How is it to be determined? Consider the ‘global appreciation’ test and the interdependence of factors (although it is not possible to determine the extent of use of the senior mark in each case here). Lastly, consider the criteria under section 5(3). Is there an identical or similar mark? Does the senior mark have a reputation (as defined in General Motors)? Is there an absence of due cause? And is there unfair advantage or detriment to the distinctive character or repute of the senior mark? The conclusion reached on likelihood of confusion or on dilution does not matter as long as the candidate demonstrates a systematic approach to the question and an effective use of the ECJ’s case law.


Reflect and review








Need to study again

I can summarise in outline the procedural steps which are taken when obtaining registration of a trade mark.

¢

¢

¢

I can explain the key elements which go to make up the statutory definition of a trade mark.

¢ ¢ ¢

I can explain how the absolute grounds for the refusal of registration of a trade mark have been interpreted by the ECJ, including the policy underlying these grounds (where such policy has been explained by the Court).

¢

¢

¢

I can explain how the relative grounds for refusal of registration of a trade mark interrelate and how they are to be applied, using the case law of the ECJ to support your explanation.

¢

¢

¢

I can list the points which must be satisfied before a trade mark can be entered on the United Kingdom Trade Marks Register.

¢

¢

¢


Must revise

Revision done

12.1 Background: registry procedure ¢ ¢

12.2 The meaning of ‘mark’ ¢ ¢

12.3 Absolute grounds for refusal ¢ ¢

12.4 Relative grounds for refusal ¢ ¢


Notes

Contents

Introduction 200

13 1 Overviewoftrademarkinfringement 201


13 3 Thescopeoftrademarkprotection 203

13 4 Generaldefencestoinfringement 208

13 5 Comparativeadvertising 211

13 6 Exhaustionofrights 213

13 7 Revocationandinvalidity 219


13 Trade mark infringement and defences


Introduction

The purpose of this chapter is to set out the rights of a trade mark owner (once the mark has been registered) to prevent others from making use of any sign which is the same as or similar to the registered mark in the course of trade.

In examining the scope of protection accorded to a registered mark, you will need to refer back to the discussion of trade mark function in Chapter 10. This is because recent case law has reinforced the link between the scope of protection and the commercial functions which trade marks perform. Further, as explained in Chapter 12, there is considerable overlap between the relative grounds for refusal (which enable the registered proprietor to stop another later mark being entered on the register) and the provisions on infringement (which enable the registered proprietor to stop another later mark being used). You will therefore be required to reread the material in Chapter 12 dealing with relative grounds or, at the very least, to confirm your understanding of it. Another comparison you will need to make is between the rights conferred under statute on the owner of a registered trade mark to stop infringers and the protection conferred at common law on the owner of an unregistered mark to prevent passing off. You should therefore regard this chapter as bringing together all the issues dealt with in the previous three chapters.

Once again, this is an area of trade mark law where European influence is very marked. You will therefore need to refer to the wording of the Trade Marks Directive alongside the Trade Marks Act 1994 (TMA), and compare and contrast the thinking of the European Court of Justice (ECJ) with that of United Kingdom courts.

This chapter begins, however, with an overview of the issues which a court will usually have to deal with in a trade mark infringement action. It is important that you acquire a clear understanding of these issues at the earliest opportunity. Appreciating the arguments which can be raised and by whom they are raised will help you to develop an ordered approach to answering trade mark infringement problems in the examination.


u list the various types of infringing conduct

u apply in sequence those sections of the TMA which set out the scope of protection afforded to a registered trade mark

u explain the various arguments which a defendant may raise in a trade mark infringement action, including the general and specific defences found in legislation, and any counterclaim for revocation or invalidity

u summarise the issues which are likely to be raised in an infringement action.

Intellectual property 13 Trade mark infringement and defences page 201

13.1 Overview of trade mark infringement

The issues which a trade mark infringement action raises can be conveniently divided into points which the claimant has to prove in order to succeed and those which a defendant will wish to raise by way of response.

A claimant who brings a trade mark infringement action will have to show two things: that an act of infringement has been committed (by analogy with the criminal law, think of this as the actus reus of infringement) and that such conduct falls within the scope of protection afforded to the registered mark. (In patent law, these issues are sometimes called ‘infringement in law’ and ‘infringement in fact’ – see Chapter 18.) Once these two points have been established, the court will normally find in favour of the claimant unless one or more of the counter-arguments raised by the defendant succeeds.

The defendant to a trade mark infringement action has several possible counter-arguments.

u First, that there was no infringing conduct and/or that this did not fall within the scope of protection given to the registered mark; in other words, the claimant has failed to establish the key ingredients of the infringement action.

u Next, even if all the ingredients of the infringement action have been proved, that one of more of the statutory defences apply to exonerate the defendant from liability. Such defences include use of one’s own name and address, descriptive use, prior use, acquiescence, comparative advertising and exhaustion of rights. Whether one or more of these defences is available will depend primarily on the facts of the individual case. Further, each of these statutory defences has precise conditions which the defendant must meet in order to succeed.

u Last, that the trade mark should be removed from the Register, either under the revocation provisions (all of which are concerned with post-registration mismanagement of the trade mark by its proprietor) or under the invalidity provisions (which are to the effect that the mark was entered on the Register in error, being in breach of either the absolute or relative grounds). As we shall see, the effects of revocation and a declaration of invalidity are different. From the defendant’s point of view, the more effective argument is that the mark should be declared invalid.

Because of the risk of a successful counterclaim for revocation or invalidity, it is standard practice for a trade mark owner to plead passing off as an alternative cause of action. Even if the mark is removed from the Register, its use will confer some degree of protection at common law. When answering a trade mark infringement problem, you may also be required to consider whether the claimant could, in the alternative, succeed in passing off. If need be, you should remind yourself of the ingredients of passing off, as set out in Chapter 11.

We shall now examine the issues in trade mark infringement in turn.


u summarise the issues which are likely to be raised in an infringement action.


13.2 Categories of infringing acts

Essential reading ¢ Bainbridge, Chapter 21: ‘The UK Trade Mark - Rights, Infringement, Limitations

and Defences, Remedies and Criminal Offences’ pp.740–44, 758.

¢ Bently and Sherman, Chapter 40: ‘Infringement’ pp.916–30.

¢ Cornish, Chapter 18: ‘Registered Trade Marks’ paras 18-84 to 18-86, 18-107 to 18-109.

¢ Norman, Chapter 15: ‘Infringement of Trade Marks’ sections 15.1 and 15.2.

¢ Trade Marks Directive Article 5(3); TMA sections 10(4) and (5), and section 103(2).

¢ Cases: Trebor Bassett Ltd v The Football Association [1997] FSR 211; C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273.

Liability for Primary Infringement

Under section 10(4) (which is based on Article 5(3) of the Directive), the following forms of conduct infringe a registered trade mark:

u affixing the sign to goods or packaging

u offering or exposing goods for sale, putting them on the market, stocking them for those purposes under the sign, offering to supply services under the sign

u importing or exporting goods under the sign

u using the sign on business papers or advertising.

This list is not exhaustive because Article 5(3) of the Directive contains the phrase ‘in particular’.

Liability under section 10(4) therefore depends on goods being ‘put on the market’ (Case C-281/05 Montex Holdings Ltd v Diesel [2006] ECR I-10881). Can a trade mark owner stop goods which are in transit through the United Kingdom, destined for sale in a third country where there may not be protection for the mark? Goods have not been imported into the EU (and so have not been ‘put on the market’) where they have been placed in a transit warehouse for onward transmission to a non-EU state: Case C-405/03 Class International BV v Colgate Palmolive [2005] ECR I-8735. These two rulings were applied by the Court of Appeal in Eli Lilly & Co v 8PM Chemist Ltd [2008] FSR 313 so that the trade mark owner could not object to goods in transit. It didn’t matter whether the goods were non-EU goods and on their way to another non-EU state (as in Class) or to a Member State where there was no IP protection (as in Diesel); being in transit through the territory of a Member State did not amount to an act of infringement as the goods were not being ‘put on the market’.

Liability for contributory infringement

Besides the list in section 10(4), there is a further form of infringing conduct found in section 10(5). This is an entirely domestic provision, and it imposes liability for contributory (or secondary) infringement on those who supply labelling, packaging, business papers or advertising material to the primary infringer. When alleging contributory infringement, the claimant must show that the defendant ‘knew or had reason to believe’ that the application of the trade mark to the packaging, etc. was not duly authorised (knowledge is not required for the acts of primary infringement in section 10(4)). The wording of section 10(5) (like similar wording in the CDPA in relation to secondary infringement of copyright) imposes an objective test, that is, the defendant is judged by the standard of the reasonable person in that line of business (LA Gear v Hi-Tech Sports Ltd [1992] FSR 121, confirmed in Vermaat & Powell v Boncrest (No 2) [2002] FSR 331).

Non-graphic use

Under section 103(2) the infringing conduct can be oral. This would cover use of a trade mark in a radio advertisement.


Use within the United Kingdom

The TMA requires that the infringing conduct be committed within the territory of the United Kingdom. Where the defendant places the infringing sign in an advertisement on a website based in another jurisdiction, it must be shown that the advertisement is targeted at customers in the United Kingdom, and that such customers are able to order goods and pay for them in sterling: Euromarket Designs Inc v Peters and Crate & Barrel Ltd [2001] FSR 288.

Activity 13.1 In relation to identifying whether there has been conduct which infringes a registered trade mark, answer the following questions:

a. What are the primary and secondary acts of infringement of a registered trade mark?

b. When does knowledge have to be proved for trade mark infringement and how is this assessed?

c. What other requirements must be satisfied before trade mark infringement ‘in law’ is established?



u list the various types of infringing conduct.

13.3 The scope of trade mark protection


and Defences, Remedies and Criminal Offences’ pp.744–53.

¢ Bently and Sherman, Chapter 38: ‘Relative Grounds for Refusal’ pp.857–89.


¢ Norman, Chapter 15: ‘Infringement of Trade Marks’ section 15.3.

¢ Trade Marks Directive Article 5; TMA sections 9 and 10.

¢ Cases: Reed Executive plc v Reed Business Information Ltd [2004] RPC 767; Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767; Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273; Case C-17/06 Céline Sarl v Céline SA [2007] ECR I-7041

¢ Spence, M. ‘Section 10 of the Trade Marks Act 1994: Is There Really a Logical Lapse’ [2001] EIPR 423.

¢ Norman, H. ‘Perfume, Whisky and Leaping Cats of Prey: A UK Perspective on Three Recent Trade Mark Cases Before the European Court of Justice’ [1998] EIPR 306.

¢ Norman, H. ‘Davidoff v Gofkid: Dealing with the Logical Lapse or Creating European Disharmony’ [2003] IPQ 342.

¢ Norman, H. ‘Time to Blow the Whistle on Trade Mark Use?’ [2004] IPQ 1.

When considering whether the defendant’s alleged infringement falls within the scope of the claimant’s registration, the starting point is the relevant statutory provisions. Read Article 5 of the Directive and sections 9 and 10 of the TMA now. The following observations can be made.


u The Directive and the TMA broaden considerably the scope of the trade mark right. Under the 1938 Act, the proprietor could sue for infringement only where the same or similar sign was used on the goods of the registration (hence passing off was much more important under the 1938 Act in offering protection against use on similar or even dissimilar goods – see Chapter 11). By contrast, the Directive and the TMA enable the trade mark owner to prevent the use of the identical or similar sign upon identical, similar or dissimilar goods.

u The manner in which the TMA implements Article 5 is questionable, in that it is split into two sections.

u The wording of the TMA is arguably narrower than that of the Directive. Contrast the wording of section 9(1) (‘exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent’) with that of Article 5 (‘the registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade...’).

u The wording of section 9(1) raises the question of whether there is a requirement of ‘trade mark use’.

13.3.1 Trade mark useAs indicated above, the wording of section 9(1) raises the question of whether there is a requirement of ‘trade mark use’. The problem is made worse by the fact that section 10, like Article 5 of the Directive, uses the word ‘sign’ in contrast to section 9(1) which uses the phrase ‘trade mark’. Under section 4 of the Trade Marks Act 1938 it was held that ‘trade mark use’ (that is, use to indicate origin) was essential, so that if the defendant’s use of the claimant’s mark was not to indicate origin, there could be no infringement: Mars v Cadbury [1987] RPC 387 (‘treat-sized WISPA bars’ did not infringe TREETS for chocolate because it was descriptive use).

Under the Directive, the ECJ has now made plain (in contrast to the comments in British Sugar v James Robertson [1996] RPC 281) that use of a sign in commerce alone does not suffice. There must be some use which affects the essential function of the trade mark, that is the trade mark owner is entitled to object to anyone seeking to take unfair advantage of the status and repute of the trade mark: Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273. There is a requirement of trade mark use, but the phrase has a much wider meaning than it did before. The decision protects the wider function of a trade mark as a vehicle for ‘creating and retaining custom’ (see Chapter 10). The ECJ made extensive reference to its earlier jurisprudence about the essential function of the trade mark and its role as guarantor, both of commercial origin and the quality of the goods. The Court stressed the importance of trade marks in achieving competition within the internal market. The exclusive rights conferred by legislation are to enable the proprietor’s specific interests to be protected. These interests would be undermined if a third party’s use of the sign was liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods.

The definitive requirements for liability have now been set out in: Case C-17/06 Céline SARL v Céline SA [2007] ECR I-7041 as explained in RxWorks Ltd v Hunter [2008] RPC 303. Four conditions must be satisfied before the trade mark right is infringed.

u Use must be in the course of trade.

u It must be without the consent of the proprietor of the mark.

u It must be in respect of goods or services.

u It must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.

The absence of consent is self-explanatory but the remaining three elements require further discussion.


Use in the course of trade

A definition of this was given by the General Court in Case T-195/00 Travelex Global and Financial Services Ltd v Commission [2003] ECR II-1677 where it was held (relying Arsenal Football Club v Matthew Reed) that the Commission had not, when it adopted the official euro symbol, used a sign which infringed the claimant’s trade mark in the course of trade. This was because the adoption of the symbol was not ‘use in the course of a commercial activity whereby goods and services are manufactured and supplied in a particular market’. For another example of what does not suffice as ‘use in the course of trade’, see Electrocoin Automatics Ltd v Coinworld Ltd [2005] FSR 79 (the appearance of the letters ‘O’, ‘X’ and ‘O’ in the display of a gaming machine supplied by the defendants did not infringe the claimant’s mark OXO as this was not use in the course of trade). In RxWorks v Hunter it was suggested that ‘use in the course of trade’ involved use ‘in the course of a commercial activity with a view to gain and not as a private matter’.

Use ‘in respect of’ goods and services

In RxWorks v Hunter it was pointed out that the TMA continues to use the language of the 1938 Act (‘use in relation to…’) while the Directive refers to use ‘for’ goods and services. The ECJ uses the phrase ‘in respect of’ and has assumed that this involves infringing conduct within Article 5(3) (section 10(4)).

An example of what is not ‘in relation to’ can be found in Trebor Bassett Ltd v The Football Association [1997] FSR 211. Here, a sweet manufacturer has supplied ‘collectable’ cards depicting members of the England football team in its packs of sweets. The defendant’s trade mark (the famous ‘three lions’ badge) could just be made out in some of the pictures. Rattee J held that such incidental use was not use in relation to the sweets: the trade mark ‘just appeared’. Another example of use which was not ‘in relation to’ the goods is Case C-2/00 Hölterhoff v Ulrich Freiesleben [2002] ECR I-4187, where the claimant’s mark had been used by a customer when ordering the goods but not by the retailer who had supplied them. By contrast, in Beautimatic International Ltd v Mitchell International Pharmaceuticals Ltd [2000] FSR 267, it was held that use on invoices was ‘in relation to’ the goods supplied. You may find it useful to reconsider the remarks of the ECJ in Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273. It was said in that case that the national court should consider why the defendant made use of the trade mark; in other words, it should ask whether the claimant’s trade mark used in order to help sell the defendant’s goods. This perhaps helps us to understand what is meant by ‘in relation to’ (and at the same time points to misappropriation theory rather than origin function as the basis of trade mark protection).

Consumer perception

Whether the fourth condition in Céline is met (i.e. that the defendant’s use affects the functions of the trade mark) is assessed through the eyes of the consumer (you should refer back to Chapter 12 for a discussion of the role of the average consumer in trade mark law). In Case C-48/05 Adam Opel AG v Autec [2007] ECR I-1017 the question which the ECJ had to determine was whether the claimant’s mark was infringed when it was used by the defendant on toy cars. The Court’s response was to say that it all depended on what the consumer thought: did they see the mark as indicating that the toys had been made by the claimant or did they think that the trade mark was simply part of the authentic appearance of the goods? If the consumer attached great importance to the fidelity of the model car to the original, this would not undermine the function of the trade mark. This is in contrast to the outcome in Arsenal, where the end user’s perception was that the football club had guaranteed the origin of the merchandise.

One problem which has emerged recently has been the use of ‘adwords’ in internet search engines such as Google. Such use involves a trader purchasing a search engine keyword identical or similar to the claimant’s mark so that when the user of a website types in the mark, a sponsored link is displayed which has nothing to do with the claimant’s business. In Case C-236/08 to C/238/09 Google France v Louis Vuitton, ECJ, 23 March 2010 it was held that Google’s sale of its AdWords tool did not amount to


use of third party trade marks in the course of trade; it merely created the technical conditions necessary for advertisers to use the marks. The position was different for advertisers. Where an advertiser sponsored a keyword which was identical to a registered trade mark and the advertisement resulting from the entry of the keyword as a search term appeared immediately afterwards and in close proximity to the point where the search term was entered, the display of the advertisement was liable to create the impression that there was a material link between the advertiser’s goods or services and the trade mark owner. This would amount to trade mark infringement since the ability of the trade mark to distinguish the goods or services of one undertaking from those of another would be undermined. However, it was for the national court to decide on the facts of each individual case whether a trade mark’s distinguishing function had in fact been (or was likely to be) affected.

Activity 13.2 u Read the rulings of the ECJ in Arsenal v Reed and Céline. Then write a concise

summary of what each says in respect of the issue of trade mark use.


13.3.2 The scope of protectionWhen applying the ‘triad of protection’ in section 10, you should remember the recommended technique advocated in Chapter 12 in relation to section 5: the provisions should be applied systematically in sequence (Reed Executive plc v Reed Business Information Ltd [2004] RPC 7670). If you are unsure of the way in which the ‘triad of protection’ fits together, go over your notes on the relative grounds for refusal from Chapter 12 now.

Under section 10(1) to (3), the permutations are the same as under section 5(1) to (3). The only difference between the two sets of provisions is that section 10 uses the word ‘sign’ whereas section 5 uses the phrase ‘trade mark’. Please read sections 10(1), 10(2) and 10(3) now. Just as section 5(3) was amended by SI 2004/946 The Trade Marks (Proof of Use) Regulations 2004, so was section 10(3), so ensure that you use an up-to-date statute book.

Identity

Under section 10(1), use in the course of trade of the identical sign in relation to the identical goods or services will infringe the registered mark. Just as with section 5(1), no likelihood of confusion need be proved as it is assumed that there is such confusion where there is absolute identity: Case C-2/00 Hölterhoff v Ulrich Freiesleben [2002] ECR I-4187. Remember, ‘identical goods’ means the goods for which the claimant’s mark is actually registered, so that if the goods are not identical, the case falls under section 10(2): British Sugar v James Robertson [1996] RPC 281. The term ‘identical sign’ requires an examination of what appears on the register: Philips Electronics NV v Remington Consumer Products [1998] RPC 283 at 312. You should refer back to your notes on Chapter 12 regarding the ECJ’s interpretation of ‘identical’ in LTJ.

Similarity coupled with confusion

Under section 10(2), use in the course of trade of the same or similar sign in relation to the same or similar goods or services will infringe the registered mark, provided that there is a likelihood of confusion which includes a likelihood of association. You should refer back to your notes on Chapter 12 and make sure that you understand each of the following issues.

u The meaning of ‘confusion’ and ‘association’.

u The permutations covered by section 10(2) (which are the same as the permutations covered by section 5(2)).

u The role of Recital 11 to the consolidated version of Trade Marks Directive in interpreting Article 5 (and hence section 10 TMA) (this is the same as for Article 4/section 5 on relative grounds).


u How similarity of marks is to be determined under ECJ case law.

u How similarity of goods is to be determined under ECJ case law.

u The meaning of the ‘global appreciation test’ for likelihood of confusion and how the ‘interdependence of factors’ operates when assessing confusion.

Dilution

Under section 10(3) (as amended by SI 2004/946 The Trade Marks (Proof of Use) Regulations 2004), use in trade of the identical or similar sign in relation to any goods or services (remember, they need no longer be dissimilar) will infringe the registered mark provided the registered trade mark has acquired a reputation and the use of the later mark without due cause would take unfair advantage of or be detrimental to the distinctive character or repute of the earlier mark. For the reasons why the United Kingdom government decided to amend section 10(3), see the ECJ’s rulings in: Case C-292/00 Davidoff & Cie SA and Zino Davidoff v Gofkid Ltd [2003] ECR I-389 and Case C-408/01 Adidas-Saloman AG and Adidas Benelux BV v Fitnessworld Trading Ltd [2003] ECR I-12537. You may find it useful to read the articles by Spence ([2001] EIPR 423) and Norman ([2003] IPQ 342) about how a gap in the protection for marks with a reputation might otherwise have occurred had the ECJ not adopted a purposive approach to the interpretation of Article 5(2) of the Trade Marks Directive.

You should refer back to your notes on Chapter 12 and make sure that you understand each of the elements which goes to make up the composite requirements of section 10(3) (i.e. all these things have to be established if an action under that provision is going to succeed), namely:

u the requirement that the defendant must be using an identical or similar sign (how is ‘identical’ interpreted? How is ‘similar’ to be decided?)

u the requirement that the senior mark must have a reputation (what does ‘reputation’ mean?)

u the requirement that the conduct of the defendant in adopting the infringing sign must be ‘without due cause’ (what does ‘without due cause’ mean and on whom does the burden of proof lie?)

u the requirement that the defendant’s use of the infringing sign must cause either unfair advantage or detriment either to the distinctive character or the repute of the senior mark. What types of harm to the mark has the ECJ said are covered by the provision?

By way of further illustration of the point that section 10(3) is not intended to have the sweeping effect of preventing the use of any mark which is the same as, or similar to, a trade mark with a reputation, compare the different outcomes in each of these infringement cases: Pfizer Ltd v Eurofood Link (UK) Ltd [2001] FSR 17, Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767 and DaimlerChrysler AG v Alavi [2001] RPC 813. In Pfizer, the claim under section 10(3) succeeded. The evidence clearly pointed to the defendant’s having attempted to ‘free ride’ on the success of the VIAGRA mark, not only by the choice of the name VIAGRENE for a drink which was said to have aphrodisiac properties, but by the choice of a blue lozenge-shaped logo for the website advertising the drink (VIAGRA tablets are made in the shape of a blue lozenge). By contrast, the facts of DaimlerChrysler AG v Alavi [2001] RPC 813 did not support the allegation of taking unfair advantage of the claimant’s mark. The defendant had operated his business selling fashion garments under the name MERC for many years. There was no evidence that he had attempted to make use of the reputation of the MERCEDES BENZ trade mark to sell his goods, nor had the cars’ image been tarnished as a result. In the Typhoon case, the judge was not convinced that the claimant’s mark did have a reputation, and even if it did, the argument that it would be damaged by the defendant’s use of TYPHOON (meaning a destructive wind) was not made out. The conclusion to be drawn from this trio of decisions is that success under section 10(3) is not guaranteed and depends on the appropriate combination of facts.


Activity 13.3Summarise the criteria for infringement found respectively in section 10(1), 10(2) and 10(3) of the TMA, giving appropriate authority on the interpretation of key words and phrases.

Reminder of learning outcomeBy this stage you should be able to:

u apply in sequence those sections of the TMA which set out the scope of protection afforded to a registered trade mark.

13.4 General defences to infringement

Essential reading ¢ Bainbridge, Chapter 21: ‘The UK Trade Mark – Rights, Infringement, Limitations


¢ Bently and Sherman, Chapter 41: ‘Defences’ pp.931–37.




¢ Cases: C-63/97 BMW v Deenik [1999] ECR I-905; Case C-100/02 Gerolsteiner Brunnen GmbH v Putsch GmbH [2004] ECR I-691; AB Volvo v Heritage (Leicester) Ltd [2000] FSR 253.

As indicated at the start of this chapter, a defendant to a trade mark infringement action may wish to argue that the claimant has failed to establish all the ingredients of the action. Alternatively, the defendant may wish to rely on one or more of the defences found in the TMA. Most of these defences are based on Article 6 of the Directive, but some are a product of domestic law. As the ECJ has repeatedly declared that Articles 5 to 7 of the Directive comprise a complete code of the trade mark owner’s rights (Case C-414/99 Zino Davidoff SA v A&G Imports Ltd [2001] ECR I-8691), you should consider whether the ‘home-grown’ defences are in breach of the Directive.

13.4.1 Consent and non-trade mark useFirst, two defences which flow from the definition of infringement itself. A defendant may claim that what has been done is with the consent of the registered proprietor (consider the wording of section 9). An example can be found in Northern & Shell v Condé Nast [1995] RPC 117, where it was held that one licensee of the trade mark could not sue another, because the latter was using the mark with consent. The other defence implicit in the definition of infringement is that of non-trade mark use. You should refer back to the discussion of the ECJ’s rulings in Arsenal and Céline as to how the issue of trade mark use is to be determined. ‘Trade mark use’ now has a much broader meaning than before: at one time it would have sufficed, in order to raise the defence, to argue that the mark had been used in a manner which did not indicate origin. Today what must be asked is whether the defendant’s use undermines any of the functions of the mark. This will of necessity involve an examination of all the surrounding circumstances and take into account the views of the reasonable consumer of the goods. If the action is brought under section 10(3), where what matters is the association which the claimant’s mark produces in the mind of the customer – even decorative use of a figurative sign may infringe. This was made clear by the ECJ in Adidas-Saloman AG and Adidas Benelux BV v Fitnessworld Trading Ltd (where the defendant had used a sign resembling the Adidas ‘three stripes’ mark to decorate clothing). The ECJ stated that the fact that a sign was viewed as an embellishment by the relevant section of the public was not, of itself, an obstacle to claiming infringement where the degree of similarity was such that the relevant section of the public established a link between the sign and the mark. So, in the case of decorative


use of a figurative (i.e. picture) mark, such as the Adidas ‘three stripes’ mark, it all depends on how the public perceives the decoration. If it creates an association in the minds of the public it will still infringe.

13.4.2 Use of another registered markSection 11(1) is one of the provisions which does not have a counterpart in the Directive. It provides that use of another registered mark will not infringe. The section therefore contemplates that there will be two conflicting marks on the Register. This may have come about because the owner of an earlier right did not oppose the application for the junior mark or else the opposition was unsuccessful. It is, of course, open to the owner of the senior mark, having sued for infringement and having been met by this defence, to seek to have the junior mark declared invalid under section 47, on the grounds that at the time of its registration, it breached the requirements of section 5. This will be subject to the time limits imposed by section 48 (explained below).

The only qualification in section 11(1) is that the junior mark must have been used in the form in which it is registered. An example of where this was not the case (so that the defence failed) was Neutrogena v Golden Ltd t/a Laboratoires Garnier [1996] RPC 473, where the defendant’s registered mark was NUTRALIA. However, what they had used was NEUTRALIA, which Jacob J held was not sufficiently similar to the registered mark (because of the different imagery created by the first syllables) for them to be able to rely on the defence.

13.4.3 Protection for other tradersAs a result of Article 6 of the Directive, there are three defences in section 11(2) which are designed to provide protection for other traders. Each of these defences is qualified by a proviso, explained below.

Defence of making use of own name and address

First, under section 11(2)(a), the defendant may plead that s/he was making use of his/her own name or address. Two cases illustrate this, IBM Corporation v Web-Sphere Ltd [2004] FSR 796 (where the defence failed because of the proviso) and Reed Executive plc v Reed Business Information Ltd [2004] RPC 767 (where it succeeded). A company can rely on the defence where it was using its trading name rather than its registered name: Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2010] EWCA Civ 110.

Defence of describing a characteristic of the goods

Secondly, under section 11(2)(b), a trader may make use of the claimant’s mark in order to describe a characteristic of his/her own goods. Thus a garment manufacturer may wish to state on the care label ‘contains LYCRA’ (which is a trade mark belonging to the DuPont Corporation). Examples from the cases include Case C-2/00 Hölterhoff v Ulrich Freiesleben [2002] ECR I-4187 (use to describe the way in which precious stones were cut) and AB Volvo v Heritage (Leicester) Ltd [2000] FSR 253 (use of VOLVO to indicate that a garage sold VOLVO cars).

Defence that trade mark indicates intended purposes

Finally, section 11(2)(c) creates a defence where use of the trade mark is necessary to indicate the intended purpose of a product or service (in particular, as accessories or spare parts). As an example, a manufacturer of automotive parts may wish to state that ‘these brake pads are suitable for use on the following models of FORD cars’ or a garage may wish to advertise that it specialises in servicing BMW cars. Even though paragraph (b) therefore enables the rival manufacturer to indicate the internal characteristics of his/her product (‘contains NUTRASWEET’), paragraph (c) is more concerned with its external attributes, such as compatibility with the products of others. ‘Necessary’ means that there is no other way that the defendant can indicate to consumers that his/her product is compatible with that of the claimant: Case C-228/03 The Gillette Company & Gillette Group Finland Oy v LA-Laboratories Oy [2005] ECR I-2337.


Proviso to the defences

These three defences are qualified by a proviso, which declares that such use must be in accordance with honest practices in industrial or commercial matters. The origin of this phrase lies in Article 10bis of the Paris Convention where it forms the definition of unfair competition. The proviso requires the court to consider the defendant’s motives in making use of the registered mark and to examine all the surrounding circumstances. Such an assessment is to be made objectively (Scandecor Development AB v Scandecor Marketing AB [1998] FSR 500 (CA)).

Guidance on the interpretation of the proviso was given by the ECJ in Case C-63/97 BMW v Deenik [1999] ECR I-905. The case also involved a discussion of the Article 7 exhaustion of rights defence (discussed below). The Court said that although Article 6 of the Directive entitled a trader to make use of another’s mark for the purposes of telling customers that he could repair goods made by the trade mark owner, such use must not confuse customers into thinking that the defendant’s business was linked to or approved by the trade mark owner, nor must the descriptive use tarnish the image of the trade mark. The Court added to this in Case C-100/02 Gerolsteiner Brunnen GmbH v Putsch GmbH [2004] ECR I-691 where it declared that ‘the condition of honest practice constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trade mark owner’. Descriptive use was not the converse of trade mark use. Instead, every case depended on its facts and it was up to the national court to see if the defendant has acted fairly in relation to the interests of the trade mark owner. The Putsch case was applied by the Court of Appeal in the Reed Executive decision.

The ECJ has since expanded this policy in Case C-228/03 The Gillette Company & Gillette Group Finland Oy v LA-Laboratories Oy [2005] ECR I-2337. The Court said that use of the claimant’s mark will not be in accordance with honest practices if:

u it gives the impression that there is a commercial connection between the defendant and the trade mark owner

u it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute

u it discredits or denigrates the mark

u the defendant presents its product as an imitation or replica of the product bearing the claimant’s mark.

Examples of the proviso being applied so as to remove the benefit of the section 11(2) defences include AB Volvo v Heritage (Leicester) Ltd [2000] FSR 253 (where the style of the defendant’s headed notepaper made customers think it was still an authorised Volvo dealer) and IBM Corporation v Web-Sphere Ltd [2004] FSR 796 (where the own name defence failed because of clear evidence that the defendant had changed its company name immediately after the launch of the claimant’s product so as to take advantage of its success).

With regard to the purchase from an internet search engine such as ‘Google’ of a competitor’s trade mark for use as an ‘adword’, the ECJ has indicated that the section 11(2) defence is unlikely to be available, although it is for the national court to decide whether such use was in accordance with honest practices: Case C-558/08 Portakabin Ltd v Primakabin BV, ECJ, 8 July 2010.

14.4.4 Other defencesUnder section 11(3) (based again on Article 6 of the Directive) there is a defence for the owner of any prior right. This particular defence is common to all registered intellectual property rights. The defendant is basically saying ‘I was here first’.

Last, under section 48 (derived from Article 9 of the Directive) there is the defence of acquiescence in the use of the mark by the proprietor of another registered mark for a period of five years. Please note the very limited effect of statutory acquiescence (which is distinct from the general equitable defence of acquiescence). The statutory


defence only applies where both marks are registered and leads to stalemate, that is, the marks are forced to co-exist. Section 48 is linked to section 11(1), as both defences assume that there are two conflicting marks on the register. You will need to remember this when we look at invalidity at the end of this chapter.


u explain the various arguments which a defendant may raise in a trade mark infringement action, including the general and specific defences found in legislation.

Activity 13.4Read the ruling of the ECJ in BMW v Deenik. What does the Court say about the protection afforded to other traders by Article 6 of the Trade Marks Directive?

13.5 Comparative advertising





¢ Norman, Chapter 15: ‘Infringement of Trade Marks’ section 15.4.7.

¢ TMA section 10(6); Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading advertising so as to include comparative advertising [2006] OJ L 376/21.

¢ Case: Case C-533/06 O2 Holdings Ltd v Hutchinson 3G UK Ltd [2008] ECR I-4231.

Comparative advertising occurs when one trader compares its goods or services with those offered by others. Such comparison will usually refer to differences in price, quality or value. The comparison may be brand free (‘cheaper than all other washing powders’) or may refer directly or indirectly to the trade mark of the competitor (‘washes cleaner than PERSIL’). Different countries have adopted differing attitudes to comparative advertising: some regard it as a form of free riding, that is, unfair competition; others regard consumer information as paramount.

United Kingdom law underwent a change of policy in 1994. Under the Trade Marks Act 1938, comparative advertising was treated as trade mark infringement (Bismag Ltd v Amblins (Chemists) Ltd (1940) 57 RPC 209, Chanel Ltd v Triton Packaging Ltd [1993] RPC 32) and even, in some cases, trade libel (Compaq v Dell [1992] FSR 93). When the TMA was introduced, it was decided that in the interests of consumer information, the law on comparative advertising should be deregulated. Section 10(6) declares that nothing in the preceding provisions shall be construed as preventing the use of a registered trade mark for the purpose of identifying the goods or services as those of the proprietor or a licensee. It may be noted that this wording does not actually refer to comparative advertising and potentially covers other situations. Nevertheless, references to Hansard indicate that section 10(6) was intended to reverse the previous law on comparative advertising as a form of trade mark infringement. The defence is qualified by a two-part proviso which states that comparative advertising is not a trade mark infringement unless it is otherwise than in accordance with honest practices in industrial and commercial matters and without due cause it takes unfair advantage of, or is detrimental to, the distinctive character or repute of the mark. There is no equivalent provision in the Trade Marks Directive.

Several United Kingdom cases considered the defence of comparative advertising, including British Airways plc v Ryanair Ltd [2001] FSR 541. Jacob J stated that despite its clear policy of permitting comparative advertising, section 10(6) is badly drafted.


He emphasised that as long as the use of the competitor’s mark was honest, there was nothing wrong in telling the public of the relative merits of competing goods and services. The advertisement was to be assessed through the eyes of the relevant public. Words were to be given their natural meaning as judged by the general public, who were used to ‘hype’. The TMA was not to be used to enforce a more puritanical standard than the general public would expect. Minute textual analysis of the advertisement was to be avoided (as this is something that the reasonable reader would not do).

You should note that section 10(6) only provides a derogation to trade mark infringement, so that where the comparative advertisement takes copyright material belonging to the claimant, section 10(6) is no defence: Macmillan Magazines Ltd v RCN Publishing [1998] FSR 9.

Section 10(6) and its case law should not be considered in isolation. There is the Comparative Advertising Directive, (Directive 97/55/EC of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising [1997] OJ L 290/18, now consolidated as Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 [2006] OJ L 376/21) (hereafter ‘the CAD’)). You will find this in your statute book. This provides that comparative advertising is acceptable only if it:

u is not misleading

u compares goods or services meeting the same needs or intended for the same purpose

u is objective and compares only material, relevant, verifiable and representative features of goods and services, which may include price

u does not create confusion in the market place between the advertiser and a competitor or between their trade marks

u does not discredit or denigrate the trade marks of a competitor

u does not take unfair advantage of the reputation of a trade mark.

The Directive was implemented in the United Kingdom by SI 2000/914 The Control of Misleading Advertisements (Amendment) Regulations 2000. Enforcement is by way of complaint to the regulatory authorities (e.g. the Advertising Standards Authority). The Regulations do not have any effect on section 10(6). The consequences for the trade mark owner are clear: if it is felt that a competitor has indulged in unfair comparative advertising, it is better by far (and considerably cheaper) to make a complaint under the Regulations than to bring an action for trade mark infringement.

The combined effect of the Trade Marks Directive and the CAD were considered by the ECJ in Case C-533/06 O2 Holdings Ltd v Hutchinson 3G Ltd [2008] ECR I-4231. In effect the Court read the two Directives together so that, in some instances, comparative advertising will be a defence to trade mark infringement.

Activity 13.5Read the ruling of the ECJ in O2 Holdings Ltd v Hutchinson 3G Ltd. What does the Court say about the relationship between comparative advertising and trade mark infringement?


13.6 Exhaustion of rights




¢ Cornish, Chapter 18: ‘Registered Trade Marks’ paras 18-113 to 18-114; 18-119 to 18-122; Chapter 1: ‘Starting Points’ paras 1-48 to 1-59.

¢ Norman, Chapter 16: ‘Exhaustion of Rights’ sections 16.1 to 16.5.

¢ Treaty on the Functioning of the European Union (TFEU) Articles 34 and 36 (formerly Articles 28 and 30 EC).


¢ Cases: 15 and 16/74 Centrafarm v Sterling Drug, Centrafarm v Winthrop [1974] ECR 1147, 1183; Case C-337/95 Parfums Christian Dior v Evora BV [1997] ECR I-6013; Case C-349/95 Frits Loendersloot v George Ballantine & Sons Ltd [1997] ECR I-6227; Case C-414/99 Zino Davidoff SA v A & G Imports Ltd [2001] ECR I-8691; Case C-143/00 Boehringer Ingelheim, Glaxo Group and others v Swingward Ltd and Dowelhurst [2002] ECR I-3759 (‘Boehringer I’); Case C-16/03 Peak Holding AB v Axolin-Elinor AB [2004] ECR I-11313; Case C-348/04 Boehringer Ingelheim v Swingward Ltd and Dowelhurst [2007] ECR I-3391 (‘Boehringer II’).

¢ Norman, H. ‘Parallel Imports from Non-EEA Member States: the Vision Remains Unclear’ [2000] EIPR 159.

¢ Tritton, G. ‘Parallel Imports in the European Community’ [1997] IPQ 196.

13.6.1 The origin of the doctrine of exhaustionExhaustion of rights as a defence to trade mark infringement will arise in one specific case, namely where goods have been imported into the United Kingdom (remember, importation is a category of infringing act). The defence will be available either to the importer or to anyone who subsequently deals with the imported goods. There are similar provisions in respect of patents, copyright and designs, but most of the case law involves trade marks. The doctrine of exhaustion arose because the ECJ had to reconcile the territorial effect of intellectual property rights with the concept of the internal market as established under the Treaty of Rome (now called, after the Treaty of Lisbon, the Treaty on the Functioning of the European Union, TFEU) (refer to Chapter 2 for an explanation of the territorial nature of intellectual property rights). The Court has had to strike a balance between the rights of the registered proprietor to keep imported goods out of the territory where the trade mark was registered and the interests of importers and consumers in the free movement of goods. The extensive case law of the ECJ in interpreting Articles 34 and 36 TFEU (formerly Articles 28 and 30 EC) (in cases referred to it as under Article 267 TFEU, formerly Article 234 EC) has been transposed into Article 7 of the Directive (section 12 of the TMA). There are similarly worded provisions in all the major harmonisation directives (such as the Computer Programs Directive, Rental Rights Directive, Biotechnological Patents Directive, and the Database Directive).

You should begin your study of exhaustion of rights by reading Articles 34 and 36 TFEU (you will find them in your statute book). Remember that EU law is supreme over national law and that Article 34 TFEU has been held to have direct effect (Case 58/80 Dansk Supermarked v Imerco [1981] ECR 181). Article 34 has been accorded a very broad interpretation, effectively prohibiting ‘all trading rules enacted by Member States, which are capable of hindering, directly or indirectly, actually or potentially, intra-EU trade’ (Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837 at 852).

When dealing with the apparent conflict between Articles 34 and 36 TFEU, the Court has used the second sentence of Article 36 as the means of striking the requisite

Read Articles 34 and 36 TFEU now (you will find them in your statute book).


balance referred to above (again, read the second sentence of Article 36 TFEU carefully). This balance is best understood by contrasting the intellectual property owner’s rights in the case of infringing and parallel imports. The difference between parallel and infringing imports is essentially a question of fact, requiring the following question to be answered: ‘Who first put these goods into circulation in the EEA?’ If first marketing was by the intellectual property owner or another person acting with their consent (e.g. a subsidiary, licensee or distributor) then those goods are parallel imports and intellectual property rights in the Member State of import cannot be used to object to further dealings in those goods (subject to the case law on repackaging, re-branding and re-labelling, discussed further below). Such objection is ‘a disguised restriction on trade’ within the second sentence of Article 36 TFEU. The intellectual property rights are said to be exhausted. If the goods were first marketed by an unconnected third party (a competitor or counterfeiter) then the intellectual property owner can always rely on national rights to prevent their importation and sale. Stopping imports of infringing products falls within the ‘protection of industrial and commercial property’ within the first sentence of Article 36 TFEU: Case C-317/91 Deutsche Renault AG v Audi AG [1993] ECR I-6227.

However, under EU law, there is no international doctrine of exhaustion of rights, so that if goods are first put on the market outside the EEA, national intellectual property rights may be used to prevent their importation and sale. This means that a further preliminary question needs to be put: ‘Where were these goods first put on the market?’

In applying the first and second sentences of Article 36 TFEU, the Court has resorted to three particular arguments which you will come across in the cases, namely:

u the difference between the ‘existence’ and ‘exercise’ of intellectual property rights

u the ‘specific subject matter’ of intellectual property

u the ‘essential function’ of each type of intellectual property.

None of these arguments is entirely transparent, but ultimately each is concerned with whether the intellectual property owner is attempting to prevent the importation of parallel or infringing goods.

The case law developed under Articles 34 and 36 TFEU before the era of harmonisation directives, can, with one exception (explained below), be applied to the interpretation of those directives. Read Article 7 of the Trade Marks Directive and section 12 of the TMA now.

Decisions made in patent cases are generally applicable to trade marks and vice versa but note again that care needs to be taken in relation to copyright cases because:

u copyright is a bundle of rights

u most copyright items are covered by Article 34 TFEU because they take the form of tangible goods, but broadcasts fall within the scope of Article 56 TFEU (formerly Article 49 EC) (freedom to provide services)

u both EU case law and EU legislation distinguish between the right to control the reproduction of the work, the right to control the sale of copies of the work, the right to control the hire of such goods and the right to control the performance of the work, whether by cinematographic exhibition or by broadcast; it is only the sale of a copyright work which falls within the doctrine of exhaustion as the rental right can never be exhausted (Case C-61/97 Egmont Films A/S v Laserdisken [1998] ECR I-5171)

u the ECJ has not yet declared what the primary function of copyright protection is, except in the case of films, where it has stressed the role of copyright in ensuring that the film maker can control the exploitation of the film through its public exhibition (Case 62/79 Coditel v Ciné Vog (No 1) [1980] ECR 881).


13.6.2 The case law of the Court: parallel imports from within the European Economic AreaEarly cases on exhaustion of rights were obliged to use the competition law provisions in Articles 81 and 82 of the Treaty of Rome (now Articles 101 and 102 TFEU), because the provisions on free movement of goods had a lengthy transitional period. In Cases 56 and 58/64 Consten & Grundig v Commission [1966] ECR 299, the ECJ ruled that a distribution agreement which sought to confer territorial protection on the exclusive licensee of a trade mark was an abusive exercise of the intellectual property right. By contrast, in Case 24/67 Parke Davis v Probel [1968] ECR 55 it stated that mere ownership of an intellectual property right was not an abuse of a dominant position.

Once the free movement of goods provisions were fully in force, the ECJ rapidly established its thinking on exhaustion of rights. In Case 78/70 Deutsche Grammophon v Metro-SB-Grossmärkte [1971] ECR 487 it held that the owner of copyright in sound recordings could not object to the sale in Germany of cheaper copies of the recordings acquired from its French distributor. The wrongful exercise of its right was a disguised restriction on trade. In Cases 15 & 16/74 Centrafarm v Sterling Drug, Centrafarm v Winthrop [1974] ECR 1147, 1183, it held that the owners of patents and trade marks for medical products could not prevent the defendant from acquiring the drugs cheaply in the United Kingdom and reselling them in the Netherlands. The goods had been put on the market within the EU with the consent of the intellectual property owner. The specific subject matter of the patent and trade mark right was to put goods in circulation for the first time. Once goods had been sold with consent (and the consent of one member of the corporate group bound all the other members), the right was exhausted.

What does ‘put on the market within the Community’ mean?

The meaning of the phrase ‘put on the market within the Community’ (which appears in Article 7 of the Trade Marks Directive) has been considered by the ECJ in Case C-16/03 Peak Holding AB v Axolin-Elinor AB [2004] ECR I-11313. The phrase requires that goods have been sold, either to members of the public or to another trader who has the power of disposal over them. Where goods have been kept in a warehouse by the trade mark owner, or displayed in a shop without being sold, then they have not been ‘put on the market’. However, if they have been supplied to another trader, then even if there is a clause in the contract of sale prohibiting that trader from reselling within the EU, the goods have been ‘put on the market’ and the doctrine of exhaustion applies. The trade mark owner cannot prevent the other trader from reselling the goods, although the act of resale might be a breach of contract. Hence in Case C-405/03 Class International BV v Colgate Palmolive [2005] ECR I-8735 it was held that goods had not been imported into the EU where they were placed in a transit warehouse for onward transmission to another non-EEA state. The IP owner could not object to their storage. However, the ECJ has now said that where goods such as ‘perfume testers’ are supplied without transfer of ownership and with a prohibition on their resale, they have not been ‘put on the market’ for the purposes of Article 7: Case 127/09 Coty Prestige Lancaster Group GmbH v Simex Trading AG, ECJ, 3 June 2010.

13.6.3 Exceptions to exhaustion

Repackaging, re-branding, re-labelling and over-stickering of goods

Where an importer decides to repackage, re-brand, re-label or over-sticker trade marked goods (usually so that they can be resold more easily to consumers in another Member State) such conduct is prima facie infringement (over-stickering involves putting sticky labels over the existing packaging as an inexpensive way of hiding the original instructions which were probably in a different language). The trade mark owner can oppose importation under Article 7(2) of the Directive (section 12(2) of the TMA) unless the parallel importer can satisfy the cumulative guidelines established by the Court. The principles apply to each type of conduct: Case C-143/00 Boehringer Ingelheim v Swingward Ltd and Dowelhurst [2002] ECR I-3759 (‘Boehringer I’), Case C-348/04 Boehringer Ingelheim v Swingward Ltd and Dowelhurst [2007] ECR I-3391. (‘Boehringer II’).


RepackagingThe first guidelines for the parallel importer who wishes to repackage goods were set out by the ECJ in Case 102/77 Hoffmann-La Roche v Centrafarm [1978] ECR 1139. Repackaging is trade mark infringement unless:

u the trade mark owner’s conduct (objectively) partitioned the market

u the importer must indicate that the goods have been repackaged

u notice is given to the trade mark owner

u the repackaging does not affect the condition of the goods (‘physical impairment’).

An example of conduct which partitions the market would be selling identical goods in different coloured boxes in different Member States.

Re-brandingWhere goods are re-branded (that is, the importer changes the trade mark from that used by the trade mark owner in the Member State of export to that used in the Member State of import) this too amounts to trade mark infringement. The ECJ originally ruled that the importer must show that the trade mark owner intended to partition the market by having separate trade marks for different Member States: Case 3/78 Centrafarm v American Home Products [1978] ECR 1823. It has since made clear that whether the trade mark owner’s conduct partitioned the market is an issue to be decided objectively without reference to intention: Case C-379/97 Pharmacia & Upjohn SA v Paranova A/S (‘Paranova II’) [1999] ECR I-6927.

Re-labellingWhere the importer removes labels affixed to goods and replaces them with other labels, this too is trade mark infringement (Case C-349/95 Frits Loendersloot v George Ballantine & Sons Ltd [1997] ECR I-6227). Labels often contain identification numbers to enable the manufacturer to recall products under food safety laws. Reliance on these numbers for other purposes (identifying customers who indulge in parallel importing or to prevent counterfeiting) does not cause artificial partitioning of the market.

The Hoffmann-La Roche guidelines were added to by the ECJ in Cases C-427/93 Bristol-Myers Squibb v Paranova, C-71/94 Eurim-Pharm v Beiersdorf and C-232/94 MPA Pharma v Rhône-Poulenc (‘Paranova I’) [1996] ECR I-3457. The Court said that samples must be supplied if demanded and that the repackaging must not be untidy, of poor quality or likely to injure the reputation of the mark (‘mental impairment’). The last of the guidelines for the parallel importer was established in Case C-379/97 Pharmacia & Upjohn SA v Paranova A/S (‘Paranova II’) [1999] ECR I-6927. Here the ECJ stated that the repackaging must be objectively necessary to enable the importer to have access to the market.

United Kingdom courts have been reluctant to accept the argument in Paranova I that there can be harm to a trade mark in the form of ‘mental impairment’ if repackaging is of poor quality (see the remarks of Laddie J in Zino Davidoff SA v A&G Imports Ltd [1999] 2 CMLR 1056 and Glaxo Group Ltd v Dowelhurst Ltd (No 2) [2000] 2 CMLR 571). However, Advocate General Jacobs advised the ECJ that it should confirm all its previous case law in ‘Boehringer I’. This the ECJ did. Since then, the matter has come before the ECJ again in ‘Boehringer II’ where the Court saw fit to re-state the principles applicable to repackaging etc. by declaring that under Article 7(2) of the Directive, a trade mark owner may legitimately oppose the further marketing of a repackaged/re-labelled/over-stickered pharmaceutical product unless:

u as a result of the trade mark owner’s conduct partitioning the market artificially, repackaging/re-labelling/over-stickering by the importer is necessary for market access

u the repackaging/re-labelling/over-stickering does not affect the original condition of the product

u the new packaging/re-labelling/over-stickering, etc. clearly states who repackaged/re-labelled/over-stickered the product and the name of the manufacturer


u the presentation of the repackaged/re-labelled/over-stickered product is not such as to be liable to damage the reputation of the trade mark and of its owner and

u the importer gives notice to the trade mark owner before the repackaged/re-labelled/over-stickered product is put on sale and, on demand, supplies a specimen of the repackaged/re-labelled/over-stickered product.

You should read the Court’s ruling in ‘Boehringer II’ carefully and note what was said about:

u when there is necessity to repackage, etc.

u the meaning of ‘liable to damage the reputation of the trade mark and of its owner’ (i.e. ‘mental impairment’)

u the requirement of notice

u the giving of samples (a point explained further by the Court in Case C-276/05 The Wellcome Foundation Ltd v Paranova Pharmazeutika Handels GmbH, ECJ, 22 December 2008)

u the burden of proof.

Advertising and after-sales service

Once goods have been imported, then they are likely to be dealt with by others, normally by resale. Those who subsequently deal in imported goods can also rely on the doctrine of exhaustion (otherwise the doctrine would be meaningless). However, in reselling or repairing the goods the third party must take care not to cause mental impairment by tarnishing the ‘aura of luxury’ associated with the product (Case C-337/95 Parfums Christian Dior SA and Parfums Christian Dior BV v Evora BV [1997] ECR I-6013 and Case C-63/97 BMW v Deenik [1999] ECR I-905).

Assignment and licensing of intellectual property rights

With regard to the transfer of ownership of a trade mark, initially the ECJ ‘got it wrong’ by treating an assignment as having continuing effect (and thereby treating an assignment as if it were a licence) (Case 40/70 Sirena v Eda [1971] ECR 69). This meant that goods coming from the new owner of the mark in Member State A could not be kept out of Member State B by the original owner, even though there was no connection between the old and new owner, and even though the change of ownership occurred many years previously. The Court went to extreme lengths in Case 192/73 Van Zuylen Frères v Hag AG (‘Hag I’) [1974] ECR 731where it held that even an involuntary change of ownership (by government expropriation at the end of the Second World War) did not break the link between the original owner and the trade mark. This was because of the Court’s obsession with the common (historical) origin of the trade mark rather than the common origin of the goods.

The change of thinking began in Case 19/84 Pharmon v Hoechst [1985] ECR 2281. Here the ECJ held that where a patent had been the subject of a compulsory licence in the Member State of export, the patentee in the Member State of import could object to the imported patented product. The patentee had not consented to the marketing of the goods. In due course, the ECJ reconsidered its thinking with regard to involuntary assignments in Case C-10/89 SA CNL-Sucal NV v Hag GF AG (‘Hag II’) [1990] ECR I-3711 (which reversed Hag I); and voluntary assignments in Case C-9/93 IHT Internationale Heiztechnik GmbH v Ideal-Standard GmbH [1994] ECR I-2789 (which reversed Sirena).

The effect of these cases can be summarised thus.

u The treatment of trade marks which have been assigned and those which have been licensed is different, so that imports from an assignee can be stopped, while imports from a licensee cannot.

u It is now clear that exhaustion of rights depends entirely on the issue of consent to marketing. Consent is a EU law concept.


However, the Court has now said that consent may be treated as having been withdrawn where the licensee breaches quality control provisions in the licence: Case C-59/08 Copad SA v Christian Dior Couture SA, ECJ, 23 April 2009. Copad is a significant case for a number of different reasons. It strengthens the argument that the trade mark acts as a guarantee of quality; it emphasises the importance of quality control provisions in a trade mark licence and makes clear that a licensee who breaches these will be liable for trade mark infringement, not just breach of contract; that where there is breach of quality control provisions in a licence, the goods will have been put on the market without consent so that Article 7(1) does not apply; and that even if selling to a prohibited retailer doesn’t affect the condition of the goods, it may still give the trade mark owner the right to oppose further commercialisation under Article 7(2) because of damage to the mark.

13.6.4 Case law of the Court: parallel imports from outside the European Economic AreaPrior to the passing of the various harmonisation directives, the rule was that where goods were first marketed in a non-EEA Contracting State, EU law had no application and it was up to the law of the Member State of import to decide whether the imports could be stopped (Case 51/75 EMI v CBS [1976] ECR 811) unless the trade mark owner subsequently consented to their importation into the EEA (Case C-352/95 Phytheron International SA v Jean Bourdon SA [1997] ECR I-1729). Some Member States recognised national exhaustion of rights only (so that parallel imports could always be stopped), others adopted a doctrine of international exhaustion of rights. The United Kingdom applied international exhaustion in relation to trade marks (Revlon Inc v Cripps & Lee Ltd [1980] FSR 87) unless the quality of the goods as sold in the country of export and the United Kingdom differed so that there would be customer confusion (Colgate-Palmolive v Markwell Finance [1989] RPC 497).

Following the enactment of the Trade Marks Directive, the key question was whether Article 7 removed the discretion left to Member States by the ruling in EMI v CBS to deal with parallel imports from non-EEA Member States in accordance with their own national laws. If (as was logical) Member States no longer had any discretion, but had to apply a single EU rule, should the EU impose a doctrine of international exhaustion or only EU-wide exhaustion of rights? Controversially, the ECJ ruled that there should be no doctrine of international exhaustion. Instead, EU Member States had to apply intra-EU exhaustion of rights: Case C-355/96 Silhouette International Schmied GmbH v Hartlauer Handelsgesellschaft mbH [1998] ECR I-4799. Further, there was to be no doctrine of implied consent, so the fact that the trade mark owner had previously agreed to the importation of goods from a non-EEA state could have no bearing on whether there was consent to the present consignment of goods (Case C-173/98 Sebago Inc & S.A. Ancienne Maison Dubois v S.A. G-B Unic [1999] ECR I-4103). In relation to each consignment of goods produced by the trade mark owner, it should be asked whether these goods have been ‘put on the market’ with consent: Case C-16/03 Peak Holding AB v Axolin-Elinor AB [2004] ECR I-11313.

The ECJ’s decision in Silhouette was critically received because it contradicted the origin function of trade marks. Why should a trade mark owner be able to object to goods s/he has placed in circulation in Singapore or the USA when s/he cannot object (subject to the repackaging rules) to goods s/he has placed in circulation somewhere in the EEA: Zino Davidoff SA v A&G Imports Ltd [1999] 2 CMLR 1056 (Laddie J). However, the ECJ has very firmly restated the position that there should be no international exhaustion of rights in EU law. In Case C-414/99 Zino Davidoff SA v A&G Imports Ltd, Cases C-415/99 and C- 416/99 Levi Strauss & Co v Tesco Stores and Costco Wholesale UK Ltd [2001] ECR I-8691 the Court was asked to rule on how consent to first marketing was to be determined in the case of parallel imports coming from outside the EEA. Despite Laddie J’s grave doubts about the compatibility of Silhouette with the origin function of trade marks, the Court made the following points in its ruling:


u First marketing outside the EEA does not exhaust the trade mark owner’s rights.

u ‘Consent’ has to be a EU concept and, because of the wording of Article 5 of the Trade Marks Directive, is a decisive factor.

u Articles 5 to 7 of the Trade Marks Directive are a complete harmonisation of the owner’s rights.

u Consent must be so expressed that an intention to renounce Article 5 rights must be unequivocally demonstrated. This will normally be by an express statement. It may be implied but the facts must unequivocally demonstrate that the trade mark owner has renounced his/her right to oppose the placing of the goods on the market within the EEA.

u Consent may not be implied from the fact that the trade mark owner has not communicated to all subsequent purchasers his/her opposition to the goods being marketed in the EEA, from the fact that a warning notice was not placed on the goods, from the absence of appropriate contractual reservations in any agreement transferring ownership of the goods, nor from the owner’s silence.

u The onus of proof is on the importer to show consent, not on the trade mark owner to show lack of consent.

u It is irrelevant that retailers/wholesalers did not pass on the trade mark owner’s reservations.

Many writers have called for the decision in Davidoff to be reversed. This would require an amendment to the Trade Marks Directive. The EU Commission has concluded that it should adhere to the policy found in the preparatory materials for the Trade Marks Directive (and restated in subsequent harmonisation directives) that there should be no EU doctrine of international exhaustion of rights.

Activities 13.6–13.713.6 Reread the rulings of the ECJ in ‘Boehringer I’ and ‘Boehringer II’. Then

summarise the rules with which a parallel importer must comply if they wish to repackage, rebrand or relabel trade marked goods.

13.7 Reread the ruling of the ECJ in Zino Davidoff SA v A&G Imports Ltd. Then summarise what the Court says about the issue of consent in relation to the parallel importation of non-EEA goods.


13.7 Revocation and invalidity

Essential reading ¢ Bainbridge, Chapter 20: ‘Bainbridge, Chapter 20: ‘The UK Trade Mark –

Registrability, Surrender, Revocation, and Invalidity, Property Rights and Registration’ pp.723–30.

¢ Bently and Sherman, Chapter 39: ‘Revocation’ pp.893–14.



¢ Trade Marks Act sections 46 and 47.

¢ Cases: C-40/01 Ansul BV v Ajax Brandbeveiliging BV [2003] ECR I-2439; La Mer Technology Inc v Laboratoires Goemar SA [2006] FSR 49; Case C-371/02 Björnekulla Fruktindustrier AB v Procordia Food AB [2004] ECR I-5791.


13.7.1 RevocationAn application to revoke a registered trade mark can be brought by any person: there is no requirement of locus standi. The application can be made directly to the Trade Marks Registry or it can be raised by way of a counterclaim in opposition or by infringement proceedings. Revocation is essentially concerned with the failure of the trade mark owner to look after the trade mark since it was registered. For this reason, the effect of a successful application for revocation is that the mark is removed from the register for the future unless the tribunal directs otherwise. In the context of an infringement action, revocation of the claimant’s mark will not exonerate the defendant from past acts of infringement, although it will enable the defendant to continue using their sign in the future.

Grounds of revocation in section 46

The grounds of revocation are listed in section 46 and comprise four aspects of mismanagement of a mark.

Non-use of the markThe first two are related but distinct, and comprise five years’ non-use of the trade mark since it was first entered on the Register (section 46(1)(a)) and any continuous five year period of non-use (section 46(1)(b)). If you don’t use it, you lose it! The policy behind revocation for non-use (as stated in Imperial Group v Philip Morris [1982] FSR 72) is that the Register should be an accurate reflection of marks currently in use. To ‘stockpile’ marks in case of possible future need or to register a mark as a pre-emptive strike against a competitor is contrary to this policy.

In regard to section 46(1)(a), the five-year period runs from the date the registration process is completed, not the date of application (BON MATIN Trade Mark [1989] RPC 537).

Promotional useUnder similar provisions under the 1938 Act, the nature of the use made by the proprietor was crucial. Promotional use did not count: see KODIAK Trade Mark [1990] FSR 49 where it was held that use of KODAK on T-shirts was not enough to maintain the registration for clothing, as the use was advertising KODAK films, not indicating the origin of the T-shirts. It is not clear whether under the TMA, promotional use will suffice, although it was suggested that this would be the case in Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767. The thinking of the ECJ in Arsenal v Reed, Opel and Céline (discussed above) is likely to be relevant. What amounts to ‘trade mark use’ for the purposes of infringement will be appropriate in deciding what amounts to use for the purpose of maintaining a registration. In Case C-495/07 Silberquelle GmbH v Maselli-Strickmode GmbH, ECJ, 15 January 2009, the ECJ ruled that there had not been genuine use of the trade mark (WELLNESS for drinks) where the proprietor had affixed it to bottles of alcohol-free drinks which it then gave away free to customers who bought items of clothing sold under the same mark. The drinks mark (as opposed to the clothing mark) had been correctly revoked for non-use. In this area, just as in other areas of trade mark law, the views of the consumer will be relevant.

Genuine use is requiredSection 46(1)(a) and (b) require the proprietor to make ‘genuine’ use of the mark. Use is ‘genuine’, according to the ECJ in Case C-40/01 Ansul BV v Ajax Brandbeveiliging BV [2003] ECR I-2439, where the mark is used in accordance with its essential function (consider again the ECJ’s earlier remarks in Arsenal). In other words, the mark must guarantee the identity of the origin of the goods or services for which it is registered, in order to create or preserve an outlet for those goods or services. Genuine use does not include token use for the sole purpose of preserving the rights conferred by the mark. When assessing whether use of the trade mark is genuine, regard must be had to all the facts and circumstances, particularly whether other traders would regard the use as justified to maintain or create a share in the market for the goods or services protected by the mark. The court should also consider the nature of those goods or services, the characteristics of the market and the scale and frequency of use of the mark.


In Ansul itself (which concerned the activities of the trade mark owner supplying parts and extinguishing substances to maintain fire-extinguishers which it had previously sold), the ECJ added that the fact that a mark is not used for goods newly available on the market but for goods that were sold in the past does not mean that its use is not genuine. It suffices if the proprietor makes actual use of the same mark for component parts that are integral to the make-up or structure of such goods or for goods or services directly connected with the goods previously sold and intended to meet the needs of customers of those goods.

In applying Ansul, the court will need to take account of all the circumstances of the case. The size of the trade mark owner’s business will be relevant (POLICE Trade Mark [2004] RPC 693) as will the nature of that business. In the case of a voluntary, non-profit organisation, using the mark on headed paper may suffice: Case C-442/07 Verein Radetzky-Orden v Bundesvereinigung Kameradschaft ‘Feldmarschall Radetzky’, ECJ, 9 December 2008. What is clear, however, is that it is the quality not the quantity of use which matters: in Laboratoires Goëmar SA v La Mer Technology Inc [2006] FSR 49 the Court of Appeal held that although the volume of sales had been small (only £800 worth had been despatched to one intermediary who had then gone into liquidation) and had not been to members of the public, the transactions in question had been at arm’s length so that title to the goods had been transferred. That transfer of title had been with a view to creating a retail outlet for the goods.

Justifying non-use

Under section 46(1)(a) or (b), the proprietor can prevent revocation by showing that there existed proper reasons for non-use, that is, obstacles arising independently of the will of the proprietor: MAGIC BALL Trade Mark [2000] RPC 439. According to the ECJ in Case C-246/05 Armin Häupl v Lidl Stiftung & Co KG [2007] ECR I-4673 the obstacles to non-use must have a direct relationship with the trade mark such that its use is impossible or unreasonable and that these must be independent of the will of the proprietor.

Alternatively, the proprietor can show that the mark has been used in a form differing in elements which do not affect the distinctive character of the mark. This alternative argument against revocation is very narrow, so that using NEUTRALIA when what was registered was NUTRALIA did not suffice (Neutrogena v Golden Ltd t/a Laboratoires Garnier [1996] RPC 473) and using similar but different cartoon drawings of penguins than those which were registered did not prevent revocation (United Biscuits (UK) Ltd v Asda Stores Ltd [1997] RPC 513). Using VENICE SIMPLON ORIENT EXPRESS differed significantly from the registered mark (ORIENT EXPRESS) so that the owner could not rely on section 46(2): ORIENT EXPRESS Trade Mark, Appointed Person, 31 October 2008.

When the mark has become a common name in the trade

Under section 46(1)(c) a registered trade mark will be revoked in consequence of the acts or inactivity of the proprietor, the mark has become the common name in the trade for the product or service for which it is registered. In other words, the mark has become generic – the name of the product itself. Consider, as an example, the name ASPIRIN. Originally this was a registered trade mark of Bayer AG but is now the name for a painkiller. Whether the mark has become the common name in the trade for the product is assessed through the eyes of the average consumer (i.e. the same test as it used under section 3): Case C-371/02 Björnekulla Fruktindustrier AB v Procordia Food AB [2004] ECR I-5791. This has the effect of reversing the old United Kingdom law in DAIQUIRI RUM Trade Mark [1969] RPC 600 (HL) which asked whether other traders used the mark as the common name for the product.

Marks liable to mislead the public

Under section 46(1)(d), the last ground of revocation is that in consequence of the use made of it by the proprietor, the mark is liable to mislead the public. The leading decision under the 1938 Act was GE Trade Mark [1973] RPC 297 (HL) which emphasised the ‘clean hands’ doctrine as the basis for this ground. The guidance from the ECJ suggests that the current law is far narrower than the old, and is a mirror image of the


Absolute Ground in section 3(3)(b) TMA (see Chapter 12). In Case C-259/04 Elizabeth Emanuel v Continental Shelf [2006] ECR I-3089 (discussed in detail in Chapter 12) the Court ruled that the mark must be inherently deceptive. Although a consumer might be influenced by the name ‘Elizabeth Emanuel’ when buying a garment, the characteristics and qualities of that garment remained guaranteed by the business which owned the mark. Therefore the name itself could not be regarded as being of such a nature as to deceive the public.

Revocation may be total or partial as to some of the statement of goods and services: David West t/a Eastenders v Fuller Smith & Turner plc [2003] FSR 816 (the description ‘beers’ was too wide when what had been sold was ‘bitter’). Where there is to be partial revocation, the views of the consumer as to how the mark has actually been used will be taken into account: Thomson Holidays Ltd v Norwegian Cruise Lines Ltd [2003] RPC 586.

13.7.2 InvalidityAn application to have a registered trade mark declared invalid can be brought by any person: there is no requirement as to locus standi. The application can be made directly to the Trade Marks Registry or it can be raised by way of a counterclaim in opposition or infringement proceedings. A declaration of invalidity is based on the simple premise that the trade mark was registered in error. The effect of a successful application for a declaration of invalidity is that the mark is removed from the register retrospectively, that is, from the date of the original registration. In contrast to revocation, this will exonerate the defendant from past acts of infringement, and consequently is a much more effective tactic to pursue. Like revocation, invalidity may be total or partial.

The grounds on which a trade mark can be declared invalid are set out in section 47(1). The subsection covers two things: first, that the mark was registered in breach of section 3. However, under the proviso to section 47(1) (which equates to the proviso to section 3(1) – see Chapter 12), where the mark was registered in breach of section 3(1)(b), (c) or (d), the plea of invalidity may be overcome where the mark has acquired factual distinctiveness since the date of registration. You should compare the proviso to section 3(1) with the proviso to section 47(1). The former requires that factual distinctiveness be acquired by use before the date of application to register the trade mark. The latter requires that factual distinctiveness be acquired by use between the date of registration and the date of the application for the declaration of invalidity. Apart from this, the effect of the two provisos is the same. The evidence required under section 47(1) will presumably have to comply with the criteria in Windsurfing Chiemsee explained in Chapter 12.

The second ground of invalidity is that the mark was registered in breach of section 5, unless the owner of the prior right consented. However, and in contrast to challenge under section 3, the standing to seek a declaration of invalidity under section 5 is much more constrained. Under the Trade Marks (Relative Grounds) Order 2007 (SI 2007/1976), only the owner of the earlier right can bring an action under section 5; and the Trade Marks (Proof of Use) Regulations 2004 (SI 2004/946) require such an action to be brought within five years of the registration of the junior mark. Therefore, while it is not fatal if the owner of the earlier right fails to bring opposition proceedings or is unsuccessful in them, they must nevertheless act within the time limits. No one else can challenge the mark for conflict with earlier rights.

Activity 13.8 Go over the materials on loss of registration (section13.7), then write a concise summary dealing with:

u the difference between revocation and invalidity

u the grounds of revocation

u the grounds of invalidity

u whether there are any arguments which can be advanced by the trade mark owner to overcome an application to revoke the trade mark

u whether there are any arguments which can be advanced by the trade mark owner to overcome an application for a declaration of invalidity.


Bitter is a traditional British beer, less fizzy and mid-brown in colour. Hops are added to the brew to make it bitter-tasting.



u explain the various arguments which a defendant may raise in a trade mark infringement action, including any counterclaim for revocation or invalidity.

Sample examination questionsQuestion 1 ‘Brand owners are at a disadvantage as it is too difficult to demonstrate trade mark infringement.’

Discuss.

Question 2 Jo Fancy is a highly successful DJ whose performances at night clubs have attracted a huge following. In order to promote his name and image, Jo registered the name FANCY as a trade mark in January 2000 in respect of baseball caps, sweatshirts and T-shirts. These items are much in demand by Jo’s fans. However, his extravagant lifestyle has resulted in stories about him often appearing in the tabloid press.

Jo now seeks your advice about his chances of success were he to bring an action either for trade mark infringement or passing off in respect of each of the following:

a. Fashion plc is selling jeans under the name FANCY PANTS.

b. Radio Grunge, which has acquired a reputation for promoting drugs and violence among young people, has distributed advertising leaflets showing a picture of Jo with the words ‘Fancy listening to our station?’ printed underneath.

c. Drinks Ltd is selling a variety of fruit flavoured spirits (targeted at the ‘youth’ market) under the name FANCY’S.

d. General Cosmetics plc is selling aftershave and shower gel labelled FANSEE.

Advise Jo.

Advice on answering the questionsQuestion 1 A good answer will cover the following points.

u Explain the issues which need to be established in a trade mark infringement action.

u Identify the relevant statutory provisions setting out the rights of the trade mark owner.

u Explain the ‘triad of protection’ found in section 10(1), 10(2) and 10(3) of the TMA.

u Comment that the protection under section 10(1) is absolute, so that as long as it can be shown that there is identity between the mark and the sign and as regards the goods or services, the trade mark owner has nothing further to prove (LTJ).

u Comment that under section 10(2) the trade mark owner must prove likelihood of confusion, a requirement highly dependent on the facts of the case because of the interdependence of factors (Sabel, Canon and Lloyd should be used extensively as authority).

u Comment that under section 10(3) the trade mark owner must show that all the factors required by the section are established (except that ‘due cause’ must be shown by the defendant). In particular, harm to the mark must be shown, being one of the three types identified by the ECJ in Intel and Bellure (see the discussion of these two cases in Chapter 12). The section is not intended to provide sweeping protection for marks with a reputation, and success is dependent on the appropriate facts being established (Pfizer, Premier Brands and DaimlerChrysler should be used extensively as illustrations).

u Point out that even though the claimant proves all the elements of infringement, the defendant can rely on a number of statutory defences, some of which are designed to protect the interests of other traders.

u Point out that the claimant’s mark may be the subject of a counter-attack for revocation or invalidity.


Question 2 In relation to trade mark infringement, the good answer will include the following points.

u Identify the issues likely to be raised in an infringement action.

u Consider whether the trade mark is likely to be the subject of a counter-attack for revocation (unlikely) or invalidity. It is the name of a celebrity (see ELVIS PRESLEY) and it is a highly descriptive word in relation to the goods of the registration (see BABY DRY and DOUBLEMINT). However, use since registration may have rendered the mark factually distinctive under the guidelines in Windsurfing Chiemsee.

u Identify which infringing conduct has been committed by each of the four defendants (this should not occupy more than a sentence or two of the answer).

u Apply the ‘triad of protection’ to each of the four defendants in turn, taking the first three subsections of section 10 systematically (Reed Executive plc v Reed Business Information Ltd). In (a), is the sign identical? Does ‘Pants’ have trade mark significance (Reed) (arguably, yes) so as the sign is not identical (LTJ) consider section 10(2) and all its elements applying Sabel, Canon and Lloyd. In (b), is this an identical sign (again, Reed is useful here as this could be a case of the senior mark being included in the junior sign and surrounded by non-trade mark matter)? However, as the services are neither identical nor similar, J would have to rely on section 10(3). Remember the composite requirements having an identical or similar mark, a senior mark with a reputation, absence of due cause and causing harm to the senior mark by one of the three means suggested by the ECJ in Intel and Bellure (see the discussion of these two cases in Chapter 12). In (c), would this be an identical mark under LTJ (the mark plus an apostrophe ‘s’) but as the goods are drinks for teenagers rather than clothing for teenagers, consider section 10(2) and 10(3) as above. Would the consumer think that J had diversified his product line under Canon? In (d), the sign is aurally but not visually identical, but anyway the goods are not identical. Under section 10(2), applying Sabel, the marks are aurally identical, but there is not visual or conceptual similarity. Would the goods be regarded as complementary (consider how many fashion houses also sell perfumes and vice versa). Would consumer think there had been diversification (i.e. indirect confusion under Canon)?

u Consider whether any of the defendants can argue that trade mark infringement has not been established or rely on any of the statutory defences. The only defendant likely to have a defence is the radio station: could they argue that this is not ‘trade mark use’? Consider Arsenal and Céline here.

In respect of passing off, the good answer will set out the ‘classic trinity’ of passing off from JIF LEMON and then proceed to apply each element to the facts of the question. Does J have goodwill to protect as a result of a reputation? Consider whether in each part there has been a misrepresentation and whether J is likely to sustain damage to goodwill. In (b) in particular, consider the implications of Irvine v Talksport (which you studied in Chapter 2) and its recognition that celebrities have merchandising rights to protect, so that there might be a misrepresentation as to endorsement and therefore a loss of opportunity to licence.


Reflect and review








Need to study again

I can list the various types of infringing conduct. ¢ ¢ ¢

I can apply in sequence those sections of the TMA which set out the scope of protection afforded to a registered trade mark.

¢

¢

¢

I can explain the various arguments which a defendant may raise in a trade mark infringement action, including the general and specific defences found in legislation, and any counterclaim for revocation or invalidity.

¢

¢

¢

I can summarise the issues which are likely to be raised in an infringement action.

¢ ¢ ¢


Must revise

Revision done

13.1 Overview of trade mark infringement ¢ ¢

13.2 Categories of infringing acts ¢ ¢

13.3 The scope of trade mark protection ¢ ¢

13.4 General defences to infringement ¢ ¢

13.5 Comparative advertising ¢ ¢

13.6 Exhaustion of rights ¢ ¢

13.7 Revocation and invalidity ¢ ¢


Notes

Contents

Introduction 228

14 1 Definitionofcharactermerchandising 229

14 2 Possiblemeansofobtainingprotection 229

14 3 Licensingoftrademarks 237


14 Character, personality and image merchandising; licensing of trade marks


Introduction

This chapter sets out the protection (or, perhaps, lack of protection) afforded under United Kingdom law to merchandising activities. Merchandising, economically speaking, is an important industry. Consider, as examples, goods sold by football clubs and other sporting organisations, the sale of memorabilia connected with celebrities, the endorsement of goods and services by famous people, and the way in which a whole range of items can be used to promote films such as ‘Jurassic Park’ or concert tours by rock stars such as the Rolling Stones.

These commercial activities have, as their foundation, contractual arrangements between the person or company ‘owning’ a name or image and undertakings which make and sell goods on their behalf. Although the Copyright, Designs and Patents Act 1988 (CDPA) contains no provisions which could invalidate a merchandising agreement based on copyright, the Trade Marks Act 1994 (TMA) has a number of provisions which are relevant to such arrangements. This chapter will therefore conclude by examining the legal issues surrounding trade mark licences and their implications for merchandising.

The chapter will first explore the legal means available to protect the merchandiser against those who wish to free ride on the success of a particular name or image. It will bring together a number of different areas of intellectual property law, namely copyright, designs, registered trade marks, passing off and breach of confidence. You have studied each one of these in detail already. If, however, at any stage of this chapter you are unsure of the underlying legal principles, you should refer back to your notes on earlier chapters. We shall select the relevant aspects of each of these and apply them to the practice of merchandising to judge their effectiveness. Each area of law has its own limitations. Brief reference will be made to the law in other jurisdictions in order to demonstrate that in the United Kingdom, the law does not always accord with commercial needs. You should therefore concentrate on those instances where protection has been denied and reflect on whether this is defensible.


u explain when the law of copyright and designs can protect merchandising activities and discuss its limitations

u explain when the law of registered trade marks can protect merchandising activities and evaluate those cases where protection has been denied

u explain how in general the law of passing off has failed to protect merchandisers against the free riding activities of others and why this might be so

u consider the extent to which the action for ‘misuse of personal information’ enables celebrities to control the use of pictures and stories about them.

u list the various legal means of protecting merchandising activities.

Intellectual property 14 Character, personality and image merchandising; licensing of trade marks page 229

14.1 Definition of character merchandising

Essential reading ¢ Cases: Lorimar Productions v Sterling Clothing [1982] RPC 395; Irvine v Talksport

[2002] 2 All ER 414.

As a starting point, the judicial definition of character merchandising which is most helpful is that given in Lorimar Productions v Sterling Clothing [1982] RPC 395 at 398 by Van Dijkhorst J. He states that it involves:

...the use of characters, locations, names, titles and logos from TV series, feature films or other entertainment programmes for promotions and the sales of products and services. It is alleged that modern buying habits are highly responsive to image-related advertising. If carefully chosen merchandise is marketed in overt association with a popular film, TV series, celebrity, fictitious character or the like, that merchandise will enjoy a greater consumer demand than could have been expected for the unadorned product.

His comments should be seen in the light of the facts of the case (an unsuccessful attempt to use passing off to prevent the use of the names DALLAS and SOUTH FORK for, respectively, clothing and restaurant services) which was essentially concerned with merchandising based on the names of fictitious characters or places. Merchandising activities, however, go far beyond this: consider sporting organisations (such as Manchester United in football, Ferrari in motor racing), celebrity endorsements (where a person’s name or image is used to sell another’s goods or services) as well as where a celebrity’s name or image is used to sell products (whether the celebrity is alive or dead).

Activity 14.1Read the cases of Lorimar and Irvine v Talksport. What do they tell you about judicial attitudes towards the protection of merchandising activities?

14.2 Possible means of obtaining protection

Essential reading ¢ Bainbridge, Chapter 23: ‘Passing Off’ p.837–42.

¢ Bently and Sherman, Chapter 33: ‘Misrepresentation’ pp.750–54; Chapter 34: ‘Damage’ pp.769–71.

¢ Cornish, Chapter 17: ‘Common Law Liability’ paras 17-33 to 17-35, 17-44 to 17-47; Chapter 18: ‘Registered trade marks’ para 18-46.

¢ Norman, Chapter 18: ‘Character Merchandising’ sections 18.1 to 18.6

¢ Jaffey, P. ‘Merchandising and the Law of Trade Marks’ [1998] IPQ 240.

As stated in the introduction to this chapter, there are several means whereby legal protection can be afforded to the merchandiser: copyright and design law, the law of registered trade marks, passing off and breach of confidence. Each has its own limitations. None provides a complete solution. We shall examine each in turn.

14.2.1 Copyright and design law

Essential reading ¢ Cases: King Features v Kleeman [1941] AC 417; BBC Worldwide Ltd v Pally Screen

Printing Ltd [1998] FSR 665; Merchandising Corporation of America v Harpbond [1983] FSR 32; Lyngstad v Anabas [1977] FSR 62; Lucasfilm Ltd v Ainsworth [2009] FSR 103 (Mann J); [2009] EWCA Civ 1328 (CA).

The simplest way in which character merchandising can be protected under the law of copyright is where the character started out as a cartoon drawing. As long as the drawing is original, copyright will subsist in it under section 4(1)(a) CDPA,


irrespective of artistic quality. The same applies where the character started out as a doll or puppet, which would be regarded as a ‘sculpture’ for the purposes of section 4. Copyright will be infringed by copying the work and issuing copies to the public (section 17 and section 18 CDPA, as explained in Chapter 8). In particular, section 17(2) CDPA provides that a work is infringed if it is reproduced in any material form, and section 17(3) adds to this by stating that a two-dimensional artistic work is infringed by a three-dimensional reproduction and vice versa. Hence, in King Features v Kleeman [1941] AC 417, POPEYE dolls and brooches were held to be infringing reproductions of the claimant’s comic strips.

The copyright owner may have difficulty in suing for infringement where the defendant merely takes the idea of the character. Copyright, remember, protects expression not ideas. However, in Mirage Studios v Counter-Feat Clothing [1991] FSR 145, where the defendant took the claimants’ concept of humanoid turtles when producing their own designs for T-shirts, Browne-Wilkinson VC nevertheless held that there was an arguable case of copyright infringement.

Where the copyright owner themselves uses the cartoon character in the manufacture of articles, this will amount to exploitation by an industrial process. As a result, the term of copyright protection will be reduced to 25 years by virtue of section 52 CDPA (see Chapter 9 for an explanation of this provision). A further difficulty which may occur should the copyright owner sue a third party for copying the artistic work is that the defendant may seek to rely on section 51 CDPA. This occurred in BBC Worldwide Ltd v Pally Screen Printing Ltd [1998] FSR 665 where the defendants had applied pictures of the TELLYTUBBIES characters to T-shirts. Laddie J held that the defendants had an arguable defence under section 51 (which provides that one cannot sue for copyright infringement of a drawing for an article which is not otherwise an artistic work where the defendant has made articles derived from that drawing). The decision should be treated with caution, as arguably the design was applied to an article (the front of the T-shirt) rather than being used to make the article (see Chapter 9 for a detailed explanation of section 51).

More significant is the decision in Lucasfilm Ltd v Ainsworth [2009] FSR 103 (Mann J); [2009] EWCA Civ 1328 (CA). The court had to decide whether the Stormtrooper helmets for the film ‘Star Wars’ could be regarded as either sculptures or works of artistic craftsmanship and so are protectable under the law of copyright. Mann J concluded that they were neither. A sculpture, he said, should have, as part of its purpose, a visual appeal in the sense that it might be enjoyed for that purpose alone, whether or not it might have another purpose as well. The purpose was that of the creator. He also held that the Stormtrooper helmets were not works of artistic craftsmanship. For a work to be to be regarded as one of artistic craftsmanship it must be possible to say fairly that the author is both a craftsman and an artist. A craftsman is a person who makes something in a skilful way and takes pride in their workmanship. An artist is a person with creative ability who produces something with aesthetic appeal. Here, the helmets fell squarely within the section 51 defence so that the action for copyright infringement was barred.

The implication of the Lucasfilm decision is that where the article in question is not a sculpture or a work of artistic craftsmanship, it can only be protected by either registered or unregistered design right. Please refer to your notes on Chapter 9 for the relevant criteria for protection.

Copyright also subsists in original literary works (sections 1(1)(a) and 3 of the CDPA), but there can be no copyright in a single word or name. In Francis Day and Hunter Ltd v Twentieth Century Fox Corporation [1940] AC 112, it was held that there was no copyright in the song title: ‘The Man Who Broke the Bank at Monte Carlo’. Similarly, it was held in Exxon Corporation v Exxon Insurance Consultants International Ltd [1981] 3 All ER 241, that there was no copyright in the invented word trade mark EXXON despite the vast amount of research and effort which went into its creation. Copyright is therefore of no assistance to the production company who wants to promote the name of a film or television series through merchandising activities.


Other forms of copyright which might assist the merchandiser are films and photographs. Taking a photograph from a film, for example, to make a transfer to be printed on T-shirts or to make posters or postcards will be infringement of copyright in the film (Spelling-Goldberg Productions Inc v BPC Publishing Ltd [1981] RPC 283; section 17(4) CDPA). In the case of photographs, copyright protection will be available if the personality (or their management company) is the owner of the copyright in the photograph and that photograph is applied to a range of goods or services without consent. But this does not stop the unauthorised exploiter from taking an independent photograph of the personality and applying it to the goods or services concerned (see Lyngstad v Anabas Products Ltd [1977] FSR 62 (ABBA), Irvine v Talksport [2002] 2 All ER 414). Furthermore, photographic copyright is very limited. In Merchandising Corporation of America Inc v Harpbond Ltd [1983] FSR 32, a portrait of the singer ‘Adam Ant’ wearing his new ‘Prince Charming’ make-up was held not to be infringement of the copyright in the photograph on which it was based. Also, it was held in that case that there was no copyright in the singer’s make-up because it was too transitory in nature.

Reminder of learning outcomeBy this stage, you should be able to:

u explain when the law of copyright and designs can protect merchandising activities and discuss its limitations.

14.2.2 Registered trade marks

Essential reading ¢ Cases: ELVIS PRESLEY Trade Marks [1999] RPC 567; DIANA, PRINCESS OF WALES Trade

Mark [2001] ETMR 254; JANE AUSTEN Trade Mark [2000] RPC 879; Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273; LINKIN PARK Trade Mark Application, Appointed Person 7 February 2005 (available from the Trade Marks Registry website).

It might be thought that the TMA improved the protection available to merchandisers. The list of what comprises a trade mark under section 1 is much broader than before and the scope of protection in an infringement action is far greater than under the Trade Marks Act 1938. Despite that, a number of problems exist.

u There may be difficulty in registering the name of a celebrity (particularly if the person concerned is no longer alive) as the name may not be inherently distinctive for the purposes of section 3(1)(b) TMA. The public may not perceive the name as indicating commercial origin, rather they will think that the name simply commemorates the person in question: see ELVIS PRESLEY Trade Marks [1999] RPC 567 (decided under the 1938 Act), DIANA, PRINCESS OF WALES Trade Mark [2001] ETMR 254 and JANE AUSTEN Trade Mark [2000] RPC 879. These last two cases, decided under the 1994 Act, may need re-evaluation in light of the decision of the ECJ in Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273. The ECJ thought the perceptions of the consumer (who need not be the original purchaser) went beyond simply recognising the commercial origin of the goods. If the trade marks in Arsenal could be infringed even though the purchasers saw the marks as ‘badges of loyalty’, then arguably the names of deceased personalities could be registrable even though they may be regarded as a form of commemoration. Despite Arsenal, the practice of the United Kingdom Trade Marks Registry in handling applications to register the names of personalities is to draw a distinction between different types of goods. Where the name is to be used on books, sound recordings or films, such use implies some form of control or guarantee, so that the name is prima facie registrable. Where, however, the goods are what the Registry calls ’mere image carriers’ (posters, photographs, transfers and figurines) the name will be seen by consumers as simply descriptive of the subject matter of the product. An example of this policy in practice is LINKIN PARK Trade Mark Application, Appointed Person 7 February 2005. It was held that the trade mark (the name of a rock group) was coined when the group was formed, but by the date of the application to register


the mark for posters was no longer so. The mark was therefore descriptive of the characteristics of the goods because a fan of the group, had they gone into a shop selling posters, would have asked for ‘a LINKIN PARK poster’. You should evaluate the correctness of this practice in view of the Arsenal ruling.

u Any attempt to register the likeness of the character or celebrity as a three-dimensional trade mark might be met by the objection under section 3(2)(c) TMA that the shape gives substantial value to the goods. In other words, consumers buy the goods primarily for their shape (see further Chapter 12). If a film company decides to make toys in the shape of one of its popular characters (for example, ‘Darth Vader’ from ‘Star Wars’), section 3(2)(c) would logically prevent the registration of the shape as a trade mark, because the item is a ‘collectible’.

u Use of the name or likeness of a character or celebrity on promotional goods may not suffice to protect the trade mark against revocation for non-use under section 46(1)(a) or (b) of the TMA (see further Chapter 13). Under the 1938 Act, promotional use of the KODAK mark on T-shirts was not enough to protect the trade mark owner against revocation in KODIAK Trade Mark [1990] FSR 49. It was suggested (albeit by way of obiter) that promotional use could suffice under the 1994 Act: Premier Brands UK Ltd v Typhoon Europe Ltd [2000] FSR 767. The effect of such promotional use would need to be assessed in the light of the ECJ’s guidance as to the meaning of ‘use’ in Case C-40/01 Ansul BV v Ajax Brandbeveiliging BV [2003] ECR I-2439 and its decision in Case C-495/07 Silberquelle GmbH v Maselli-Strickmode GmbH, ECJ, 15 January 2009 where promotional use did not protect against revocation.

u The use of the name or likeness of a character or celebrity on merchandise produced without consent by a third party may not amount to ‘trade mark use’ for the purposes of trade mark infringement under section 10 TMA (see Chapter 13). Under the pre-1994 law, the application of a slogan as decoration to T-shirts was held not to amount to trade mark use in Unidoor v Marks & Spencer plc [1988] RPC 275 because it was merely decorative, and did not indicate origin. The ECJ has indicated that in the case of a trade mark with a reputation, decorative use may amount to infringement for the purposes of section 10(3): Case C-408/01 Adidas-Saloman AG and Adidas Benelux BV v Fitnessworld Trading Ltd [2003] ECR I-12537. Further, the meaning of ‘trade mark use’ has been extended radically by the ECJ in Case C-206/01 Arsenal Football Club v Matthew Reed [2002] ECR I-10273. The Court ruled that even if goods are bought by football fans as a ‘badge of loyalty’, this still amounts to trade mark use. By analogy, if an Elvis Presley fan buys a cup bearing Elvis’s name or picture, this would still amount to trade mark use for the purposes of infringement, assuming, that is, that the name or image had been successfully registered as a trade mark. You are referred to the importance of the consumer’s views as to whether something amounts to ‘trade mark use’ and to the rulings of the ECJ in Case C-48/05 Adam Opel AG v Autec [2007] ECR I-1017 and Case C-17/06 Céline SARL v Céline SA [2007] ECR I-7041 discussed in Chapter 13.


u explain when the law of registered trade marks can protect merchandising activities and evaluate those cases where protection has been denied.

14.2.3 Passing off

Essential reading ¢ Cases: Taverner Rutledge v Trexapalm [1977] RPC 275; Lyngstad v Anabas [1977] FSR

62; Children’s TV Workshop v Woolworths (NSW) Ltd [1981] RPC 187; Mirage Studios v Counter-Feat Clothing [1991] FSR 145; Irvine v Talksport [2002] 2 All ER 414; Clark v Associated Newspapers [1998] 1 All ER 959.

As indicated above, copyright law is incapable of protecting the name of a character or the title of a film or television series. In the absence of trade mark registration, passing off would appear to be the most logical means of providing protection for a name.


It might be thought that the claimant simply has to satisfy the requirements of Lord Diplock in Erven Warnink BV v Townend & Sons [1979] AC 731 or those of Lord Oliver in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 (refer back to Chapter 11 if you are unsure about these). Further, there is no rule that the claimant and defendant must be trading in the same or related fields in order to succeed in passing off (Lego Systems A/S v Lego M Lemelstrich Ltd [1983] FSR 155). Despite this last point, the lack of a common field of activity has proved to be a significant defence to a claim for passing off in character merchandising cases.

Harm to goodwill: lack of competition

In United Kingdom passing off actions where the claimant has sought to protect the names of characters or celebrities (whether real or fictitious) the defendant (i.e. the copyist) has generally succeeded. The reason for this outcome is, quite simply, that no harm has been done to the claimant’s business. If the claimant makes films or television programmes, then the goodwill in that business is not diminished if a third party makes and sells merchandise. If the claimant is an individual celebrity actor or singer trying to protect their image, then again they have no business goodwill to protect. Arguments that the public are used to merchandising activities and expect the claimant to have approved or endorsed the products are normally dismissed out of hand by the judges.

One case where the claimant was successful was Shaw Bros v Golden Harvest [1972] RPC 559, where the Hong Kong court granted protection for the name of a martial arts film character, ‘the one-armed swordsman’. However, both claimant and defendant were in the same line of business, that is, they were both film producers, so harm to goodwill by competition was established.

United Kingdom cases have not been so kind. In Wombles v Wombles Skips [1977] RPC 99, the creator of the WOMBLES (characters in a children’s television programme who liked to clear up rubbish) was unable to prevent the defendant trading under the name ‘Wombles Skips’ (i.e. a business specialising in waste removal). The lack of a common field of activity meant that there was no harm to goodwill. In Taverner Rutledge v Trexapalm [1977] RPC 275, the official licensees from the makers of the KOJAK television series were sued for passing off by a sweet manufacturer who had been selling KOJAK lollipops for some time. It was the sweet manufacturer who had established goodwill in the name, and the ‘rightful’ owner was harming the copyist’s goodwill! The licensees’ rights in a name which had not been registered as a trade mark and the goodwill of which related only to television programmes were ‘as writ in water’ (per Walton J). You have already encountered the South African DALLAS decision which is to the same effect: Lorimar v Sterling [1982] RPC 395.

Even the names of real people (as opposed to fictitious characters) have received similar treatment, so that the group ABBA were unable to prevent third parties producing merchandise bearing the name of the group: Lyngstad v Anabas [1977] FSR 62. The official licensee of NASA, the USA space agency, had no rights against a clothing manufacturer who had been selling leisure wear under the same name: Nice and Safe Attitude Ltd v Flook [1997] FSR 22.

Australian decisions

The Australian courts have displayed a more generous approach to the practice of character merchandising. In Henderson v Radio Corporation Pty Ltd [1969] RPC 218, it was accepted that a common field of activity is not an essential requirement for passing off. Passing off, it was said, is established on proof of misrepresentation and it is not necessary to prove actual damage. It is enough that the claimant has been deprived of the right to approve the product for a fee. Thus, in Henderson itself, well-known professional ballroom dancers were held entitled to prevent the sale of a dance music record which carried their photograph. In Children’s Television Workshop Inc v Woolworths (NSW) Ltd [1981] RPC 187 it was accepted that the public are familiar with the practice of character merchandising and will believe that an image-bearing product is produced under licence from or with the approval of the image owner.


In Hogan v Koala Dundee Pty Ltd (1988) 83 ALR 187 (‘CROCODILE DUNDEE I’), and Pacific Dunlop Ltd v Hogan (1989) 87 ALR 14 (‘CROCODILE DUNDEE II’), the court accepted that passing off should cover the intentional misappropriation of personality or ‘image filching’.

The public perception of merchandising

Some United Kingdom cases have shown an awareness of the public perception of merchandising. In IPC Magazines Ltd v Black and White Music Corp [1983] FSR 348, the claimant sought an interim injunction to restrain the defendants from releasing a record named after, and containing a song about, the claimant’s science-fiction cartoon character JUDGE DREDD. JUDGE DREDD enjoyed a cult following and, by the time of the case, both the drawings and the name had been the subject of merchandising agreements. The claimant argued that it had suffered damage under two headings, namely damage to the reputation of their character and damage to their existing licensing operations. It was alleged that others would be encouraged to use the character without seeking licences. Goulding J was prepared to accept that misrepresentation had been established because members of the public might think that the record was approved by the claimant. But the claimant had failed to show damage to reputation (the record was ‘no worse’ than others in the charts) and there was no evidence that others would use the character without a licence.

The most significant decision under United Kingdom law is that in Mirage Studios v Counter-Feat Clothing [1991] FSR 145. However, as Browne-Wilkinson VC relied heavily on an earlier Australian case, it will be useful to consider this first.

The MUPPETS decisionIn Children’s TV Workshop v Woolworths (NSW) Ltd [1981] RPC 187 the claimants were the producers of the television series SESAME STREET and the creators of the MUPPETS. The MUPPET characters had been licensed in Australia for a wide variety of products including soft toys. All licensed products were manufactured under strict quality control. The defendants commissioned the making of cheap imitation MUPPET soft toys and sold them through their WOOLWORTHS stores. Copyright protection was not available to the claimants because the design of the MUPPETS should have been registered under the then Australian registered design law but had not been. As they had not been so registered, copyright protection was denied (compare this with the similar exclusion under section 10 of the United Kingdom Copyright Act 1956 explained in Chapter 9). Nevertheless, the court granted interim relief. We may note how the court applied the ‘classic trinity’ of passing off (see Chapter 11) to the facts of the case. The claimants had established a reputation: the evidence showed that the public would recognise the toys as the MUPPET characters from SESAME STREET. Further, the public were aware of the practice of character merchandising and would associate the toys with the claimants. The parties were operating in a common field of activity: both were concerned with getting MUPPET toys on the market, albeit through licensing arrangements rather than manufacture in the case of the claimants. The defendants were passing off their goods as those of the claimants as being made under licence. Lastly, the defendants’ toys were ‘lousy imitations’, thus causing damage to the claimant’s goodwill.

The NINJA TURTLES decisionIn Mirage Studios, the claimants owned copyright in the drawings for the characters TEENAGE MUTANT NINJA TURTLES. They did not manufacture or market goods themselves, being concerned mainly with the creation of cartoons, films and videos depicting the characters. However, a major part of their revenue was derived from royalties received under various licensing agreements made with those who wished to use the characters to sell goods (over 150 of such licences had been granted in the United Kingdom). Each licence contained quality control provisions. Counter-Feat Clothing also made drawings of humanoid turtles (in sporting guise), relying on the turtle concept rather than the claimants’ actual drawings. The defendants licensed their drawings to certain manufacturers to reproduce the images on clothing. Browne-Wilkinson VC granted the claimants an injunction for the reason that there was an


arguable case of copyright infringement. The essential requirements propounded by Lord Diplock in Warnink v Townend had been made out. The public had mistaken the defendants’ TURTLES for the claimants’ TURTLES and they ‘expect and know that where a famous cartoon or television character is reproduced on goods, that reproduction is the result of a licence granted by the owner of the copyright or owner of other rights in that character’. An important part of the claimants’ business consisted of licensing the copyright in their NINJA TURTLES drawings and they would lose royalties if the unauthorised exploitation of the drawings was allowed. The licensing right would be significantly reduced by placing TURTLE pictures on inferior goods.

Points to note Points to note about the decision in NINJA TURTLES are that, first, there was a common field of activity. Both claimants and defendants were in the business of licensing pictures of TURTLE characters, although neither was actually concerned in the manufacture or selling of the goods. The claimants were able to show extensive merchandising activities. Another important factor was that the claimants were licensing copyright material. Passing off exists to protect the goodwill in a business. Here, because the business included licensing activities and not just making films, Browne-Wilkinson VC was able to identify harm to the claimants’ business as a result of the defendants’ conduct. The existence of copyright material also enabled Browne-Wilkinson VC to distinguish earlier United Kingdom authorities (WOMBLES, KOJAK, and ABBA) because these were concerned with the licensing of names (in which there was no copyright, and therefore no separate business in licensing their use) and to express his preference for the Australian authorities, chiefly the MUPPETS case.

Sponsorship by a person or organisation

Another type of merchandising activity which has received judicial scrutiny in the context of passing off is where the name of an organisation or a famous person is used to endorse a product. If the organisation or person has not agreed to the use of their name, this may amount to passing off. Until recently, the cases revealed the possibility of two different outcomes, depending on whether the name in question was that of a professional body or a commercial organisation, on the one hand, or an individual on the other. For example, in BMA v Marsh (1931) 48 RPC 565, the British Medical Association was able to prevent a pharmacist placing the letters BMA above his shop; and in Walter v Ashton [1902] 2 Ch 282, the Times newspaper could prevent its name being used to sell bicycles. In contrast, in Sim v Heinz [1959] RPC 75, it was held that there was no misrepresentation of endorsement where the defendant’s television advertisement for its soup imitated the voice of a famous actor. In McCulloch v May (1947) 65 RPC 58, the presenter of children’s radio programmes could not restrain the sale of breakfast cereal using his name (‘Uncle Mac’) as there was no common field of activity. Lastly, in Stringfellow v McCain Foods (GB) Ltd [1984] RPC 501, a nightclub owner unsuccessfully argued that the defendant has committed passing off when it had called its chips ‘Stringfellows’. The public would not be misled into thinking that the claimant had approved the product.

A significant change of attitude can be found in Irvine v Talksport [2002] 2 All ER 414. You have already encountered this case earlier in this chapter and in Chapter 2. The important points to note here are:

u that the claimant was already in the business of entering agreements for the use of his name and/or image to sell goods and services

u the recognition by Laddie J that the public is aware of the practice of celebrity endorsement.

However, you should also note a possible limitation imposed on this decision by the earlier Court of Appeal case of Harrods v Harrodian School [1996] RPC 697. Even if the claimant is involved in the granting of licences, for the defendant simply to hint at ‘official’ approval or sponsorship may not be enough for liability if there is not origin confusion. The public must have a mistaken belief that the claimant actually endorsed the defendant’s product.


Another example of passing off being used successfully to protect the name and image of an individual is Clark v Associated Newspapers [1998] 1 All ER 959. Here, a well-known politician and author was able to get an injunction to restrain a newspaper from publishing a column entitled ‘Alan Clark’s Secret Election Diary’. The defendant had failed to do enough to prevent the public from being misled into thinking that the claimant had actually written the column when he had not. A significant factor was that the claimant had already published some of his memoirs (The Alan Clark Diaries) which had proved highly successful. He therefore had a reputation as an author which was capable of protection.


u explain how in general the law of passing off has failed to protect merchandisers against the free riding activities of others and why this might be so.

14.2.4 Breach of confidence and privacy

Essential reading ¢ Cases: Douglas & Zeta-Jones v Hello! Ltd (No 2) [2005] 4 All ER 128 (CA); Douglas v

Hello! Ltd [2007] 2 WLR 920 (HL) (do not try to read the whole case, only those parts relating to whether the defendant was liable to OK Magazine as well as Mr Douglas); Naomi Campbell v MGN [2004] 2 AC 457 (HL) (especially the judgment of Lord Hope); Von Hannover v Germany (2004) 40 EHHR 1; Murray v Express Newspapers [2009] Ch 481.

¢ Carty, H. ‘Advertising, Publicity Rights and English Law’ [2004] IPQ 209.

When considering this aspect of image merchandising, you may wish to revisit your notes from Chapter 5 on the use of breach of confidence to protect privacy. In particular, you need to ensure that you understand the different judicial tests for ‘classical’ breach of confidence and for ‘misuse of personal information’.

One aspect of breach of confidence which is relevant to merchandising is the extent to which celebrities can control the use of their image in the media. Although, at one time, it was said that there was no general law of privacy in the United Kingdom (Kaye v Robertson [1991] FSR 62), this has now changed. One of the significant cases is the decision of the European Court of Human Rights in Von Hannover v Germany (2004) 40 EHHR 1. This makes clear that Contracting States of the ECHR have to ensure that the right to private life (found in Article 8 of the ECHR) is protected. The Article 10 right (freedom of expression) is not to prevail over Article 8 unless the person in question holds public office. The court is required to ask whether the person has a reasonable expectation of privacy which is to be assessed objectively. If they do then, subject to the Article 10 right, there can be liability for ‘misuse of personal information’ (Naomi Campbell v MGN [2004] 2 AC 457; Douglas & Zeta-Jones v Hello! Ltd (No 2) [2005] 4 All ER 128; Murray v Express Newspapers [2009] Ch 481). The defendant cannot argue that it is seeking to reveal conduct on the part of the claimant which some would find distasteful (Mosley v News Group Newspapers [2008] EWHC 1777), although privacy may be lost where the claimant has been untruthful or hypocritical, so that there is the need to ‘set the record straight’ (Browne v Associated Newspapers [2007] 3 WLR 289).

One particular form of media intrusion is photography. At one time, a celebrity who was photographed in a public place had little redress, unless that photograph was taken surreptitiously (Naomi Campbell v MGN). The result was different if the photograph is taken on private premises: Theakston v Mirror Group Newspapers, Ouseley J, 14 February 2002. This may help to explain the extensive contractual arrangements employed by the claimants in Douglas v Hello! to ensure that unauthorised pictures of their wedding were not published. The effect of Von Hannover is to give greater protection to those celebrities who are photographed in public: Murray v Express Newspapers.


Many privacy cases involve contractual arrangements. Apart from Douglas v Hello!, you should return to your notes on Chapter 5 and reconsider the cases of McKennitt v Ash [2007] 3 WLR 194 and HRH Prince of Wales v Associated Newspapers Ltd [2007] 3 WLR 222. The existence of contractual arrangements led the House of Lords in Douglas v Hello! Ltd to suggest that the case was not actually about misuse of personal information, but a straightforward commercial breach of confidence. As a result, the magazine with whom Mr and Mrs Douglas had made an exclusive deal to publish their wedding photographs had a claim against the defendant for publishing rival photographs.

With regard to remedies, the obiter comments in Douglas v Hello! Ltd (No 2) (CA) and Douglas & Zeta-Jones v Hello! Ltd (HL) suggest that an interim injunction is more likely to be granted to restrain the publication of unauthorised images, because of the unique ability of photographs to invade a person’s privacy, not just once, but repeatedly, each time the photograph is published. What is unclear, however, is whether, should publication actually occur, more than nominal damages are to be awarded, particularly if the images are not very flattering. The Court of Appeal in Douglas v Hello! Ltd (No 2) did not disturb the award of damages to the claimants, a conclusion which is at odds with its remark to the effect that interim relief should have been granted. It may be that the underlying basis of the complaint was not so much invasion of privacy, but a loss of control over the right of publicity. Privacy and publicity are, of course, two sides of the same coin, but need to be kept distinct. One is personal, the other is commercial.



Activities 14.2–14.314.2 Go over your notes on the types of intellectual property rights which are

available to protect merchandising activities. Then write a summary of the different rights. Your answer should include:

u the advantages of each type of intellectual property right

u the drawbacks of each right.


14.3 Read the judgment of Browne-Wilkinson in Mirage Studios v Counter-Feat Clothing. To what extent does the case show a judicial willingness to recognise and protect merchandising activity?

14.3 Licensing of trade marks


Revocation, and Invalidity, Property Rights and Registration’ pp.730–33.

¢ Bently and Sherman, Chapter 42: ‘Exploitation and Use of Trade Marks’ pp.961–64; Chapter 39: ‘Revocation’ pp.898–99.

¢ Cornish, Chapter 18: ‘Registered Trade Marks’ paras 18-14 to 18-15; 18-76 to 18-78.

¢ Norman, Chapter 17: ‘Dealings in Intellectual Property Rights’, section 17.3.4.2.

Celebrities who wish to make money out of their image and the creators of films and television programmes who wish to take advantage of the success of their work will often register trade marks as the first step in the merchandising process. Assuming that the difficulties listed above in section 14.2.2 can be overcome and registration is obtained, the next step is to enter into a series of trade mark licences with those who wish to exploit the name or image in question.


Licensing under the TMA

The TMA makes the business of trade mark licensing more straightforward than its predecessor. It declares that a trade mark is personal property (section 22) so that it can be assigned like any other form of intangible personal property, with or without the goodwill of the business (section 24). The meaning of ‘goodwill’ was explained in Chapter 11 (‘the attractive force which brings in custom’ and ‘that which distinguishes an old business from a new’ per Lord McNaghten in CIR v Muller & Co’s Margarine Ltd [1901] AC 217). Further, under section 28(1), a trade mark can be licensed, either in a general or in a limited manner, partial licences being granted either to some of the goods or services, as to a locality, or as to manner of use. A trade mark licence (whether exclusive or non-exclusive, general or partial) must be in writing and signed by the trade mark proprietor (section 28(2)). A trade mark licence will bind the proprietor’s successor in title unless it says otherwise. The licensee can grant sub-licences unless there is a provision to the contrary. However, like any other transaction affecting the property right in the mark, the licence must be recorded at the Trade Marks Registry (section 25). Failure to do so means that the licensee is at risk from a bona fide purchaser of the mark, and the licensee will not obtain the procedural rights conferred on licensees under the Act. Failure to record the licence within six months of its being granted (or as soon as practicable thereafter) means that the claimant will not be awarded costs in any subsequent infringement action.

The rights of the licensee

An exclusive licensee (as defined in section 29) is given certain procedural rights by section 31. However, even though the licensee can bring infringement proceedings in their own name, that does not give them any proprietary rights over the trade mark. A trade mark licence simply confers personal rights: Northern & Shell v Condé Nast [1995] RPC 117.

The critical clause which must be present in a trade mark licence is one imposing an obligation on the licensee to comply with the proprietor’s instructions as to the quality of the goods. The proprietor must be able to dictate quality and to ensure that the obligation is being observed. The sorts of clauses which are normally inserted in a trade mark licence are those requiring the licensee to submit samples periodically or those which permit the proprietor to enter the licensee’s premises with a view to checking the quality of the goods being made there.

The importance of quality controlThe reason why quality control is so important is because it impinges on the functions which trade marks fulfil (see Chapter 10). Under the 1938 Act, where the only recognised function was that of indicating origin, to license a trade mark without an effective system of quality control undermined the origin function and rendered the trade mark deceptive. Further, if the trade mark proprietor was willing to grant an unlimited number of licences to other firms, then that would amount to ‘trafficking in a trade mark’, a practice which meant that the Registrar could refuse to register any licence relating to that mark: Re American Greetings Corporation’s Application [1984] 1 All ER 426, HL.

The prohibition on ‘trafficking in a trade mark’ (that is, treating the mark as a commodity in its own right) is no longer in the United Kingdom legislation. However, the presence of quality control is relevant as regards the revocation of trade marks. It had been held under the 1938 Act that where the trade mark owner failed to exercise contractual rights of control (in effect leading to a ‘bare’ licence of the mark), the mark would be at risk for revocation for non-use because the use of the mark accrued to the licensee not the licensor: JOB Trade Mark [1993] FSR 118. This is not the case under the TMA, because any use with consent is enough to prevent revocation under section 46(1)(a) or (b). The House of Lords did suggest that uncontrolled use by a licensee might render the mark deceptive as to the origin of the goods (and hence liable to revocation under section 46(1)(d)) because the public associate the mark with the licensee and not the proprietor: Scandecor Development AB v Scandecor Marketing AB [2001] 2 CMLR 645. However, the ECJ’s decision in Case C-259/04 Emanuel v Continental


Shelf 128 Ltd [2006] ECR I-3089 states that it is the mark itself which must be inherently deceptive not the use which is made of it. Lack of care by the licensor is unlikely to lead to revocation.

A recent ECJ case has shown that the presence of quality control provisions in a trade mark licence may give the trade mark owner enhanced powers in the context of the free movement of goods. As discussed in Chapter 13, Case C-59/08 Copad SA v Christian Dior Couture SA, ECJ, 23 April 2009, shows that breach of the terms of a licence (at least one involving luxury goods) may entitle the proprietor to sue the licensee under Article 8(2) of the Trade Marks Directive because the quality of the goods might be affected (one of the conditions set out in Article 8(2)). Further, because of the quality control clause, the licence does not amount to absolute and unconditional consent so that there can be no exhaustion of rights. A further argument is that even if such contractual breach does not trigger the right to sue under Article 8(2), the proprietor can rely on Article 7(2) of the Directive and can oppose further commercialisation of the goods, but only where it could be established that the resale of the goods could damage the reputation of the trade mark.

The case of Arsenal v Reed, discussed above, adopts, as we have seen, a far broader view of trade mark function. The ECJ emphasised the importance of the function of guaranteeing the quality of goods. You should therefore consider the implications of this for trade mark licensing. If a registration can be revoked because the mark has become deceptive (reread section 46(1)(d) TMA carefully), what does this tell you about the importance of:

u inserting quality control provisions in trade mark licences

u the need for the trade mark owner to make effective use of such contractual provisions?

Lastly, you should compare this aspect of trade mark law with the passing off of cases on character merchandising, particularly the decisions in MUPPETS and NINJA TURTLES. Remember how important it was in those cases that the owners of the images had inserted effective quality control provisions in their licences and how in each case the court commented on the poor quality of the defendant’s goods.

Activity 14.4Explain the meaning and importance of quality control in:

a. trade mark licences

b. character merchandising generally.


u explain when the law of copyright and designs can protect merchandising activities and discuss its limitations

u explain when the law of registered trade marks can protect merchandising activities and evaluate those cases where protection has been denied

u explain how in general the law of passing off has failed to protect merchandisers against the free riding activities of others and why this might be so


u list the various legal means of protecting merchandising activities.


Sample examination questionsQuestion 1 ‘Under the English law of passing off, a cartoon character is better protected than a pop star.’

Discuss whether, and why, this statement is true or not.

Question 2 Chris is a freelance author and artist who occasionally writes stories for Picture Perfect Comics (Picture Perfect). Some ten years ago he created a character called ‘Dilly the Dinosaur’. Chris proceeded to write a number of stories about Dilly which were aimed at younger readers, his stories being accompanied by cartoon drawings of Dilly. Picture Perfect published the original stories and cartoons in one of their magazines, TeenyBopper Tales. Dilly the Dinosaur proved to be a great success with children in the 7 to 11 age group.

Keen to make money out of the success of Dilly, Chris and Picture Perfect next published a series of books. The series was called ‘The Dilly the Dinosaur Series’ and consisted of stories and drawings about Dilly, intended to both entertain and educate by introducing young readers to basic scientific information. Again, the series proved to be very successful. Each volume of the series has a picture of Dilly on the front cover as well as the name, ‘Dilly the Dinosaur’.

Picture Perfect and Chris have just agreed that it would be a good idea to develop Dilly the Dinosaur merchandise. They have approached Speedy Ltd with a view to negotiating a licence to produce greetings cards and posters based on the Dilly character. At a meeting last week, Speedy informed them that there were already a number of other merchandisers selling Dilly the Dinosaur products. In particular, Speedy mentioned the activities of:

a. Rupert, who is selling T-shirts and other items of clothing bearing pictures of dinosaurs that look like Dilly

b. Framleys, a well-known department store, which is selling cuddly toys in the shape of dinosaurs

c. Mrs Mayson, who has opened a ‘Dilly the Dinosaur’ coffee shop.

Advise Chris and Picture Perfect how they could stop the unofficial merchandising activities of Rupert, Framleys and Mrs Mayson.


u identify that the question concerns character merchandising as a particular aspect of passing off

u briefly summarise the elements of passing off and give a definition of character merchandising

u indicate what other legal means of protection are available, particularly copyright

u explain how the defence of ‘no common field of activity’ resulted in lack of protection for the image owner in WOMBLES, KOJAK, ABBA and Lorimar

u explain how Mirage Studios (influenced by the MUPPETS case) came to a different conclusion

u point out that the presence of copyright licensing as an aspect of the claimant’s business was crucial to the outcome of this last-mentioned case

u contrast the decisions in Irvine and Alan Clark where the celebrity had a business interest to protect (thereby showing that it is possible for celebrities to succeed in passing off if the facts are suitable)

u comment on how other jurisdictions (notably Australia) have afforded much better protection.


Question 2 This question is intended to test candidates’ understanding of the issues surrounding the practice of character merchandising. In particular, it requires students to explain how the ability to stop unofficial merchandising activities depends heavily on which area of law the claimant uses, copyright, registered trade marks or passing off. A good candidate will be able to deal competently with both copyright and passing off.

Parts (a) and (b) were concerned with the application of copyright law to merchandising, particularly artistic copyright. In (a), a good answer would consider the basics on copyright infringement (i.e. whether there was objective similarity, derivation and substantial taking). Had Rupert copied? If so, what had he copied – the idea of a dinosaur character or Chris’s expression? You are reminded of the importance of Designers Guild as the leading authority on copyright infringement. Further, in view of BBC Worldwide v Pally Screen Printers and Lucasfilm, would Rupert have a defence under s51 CDPA? In (b), Framleys were selling three-dimensional articles, toys in the shape of dinosaurs. Bearing in mind CDPA s17(3) (a two-dimensional artistic work is infringed by the making of a three-dimensional copy), was there objective similarity, derivation and substantial taking? Again, would the s51 defence apply? If it would, could the claimants have relied on NINJA TURTLES as authority to obtain relief in passing off? Was it significant that they were themselves starting to merchandise?

Part (c) did not involve copyright (there can be no copyright in the title of a book) and instead required a discussion of the extensive case law on the use of passing off to prevent unofficial merchandising where what is taken is the name of the character (e.g. Wombles, Kojak and Abba).


Reflect and review








Need to study again

I can explain when the law of copyright and designs can protect merchandising activities and discuss its limitations.

¢

¢

¢

I can explain when the law of registered trade marks can protect merchandising activities and evaluate those cases where protection has been denied.

¢

¢

¢

I can explain how in general the law of passing off has failed to protect merchandisers against the free riding activities of others and why this might be so.

¢

¢

¢

I can consider the extent to which the action for ‘misuse of personal information’ enables celebrities to control the use of pictures and stories about them.

¢

¢

¢

I can list the various legal means of protecting merchandising activities.

¢ ¢ ¢


Must revise

Revision done

14.1 Definition of character merchandising ¢ ¢

14.2 Possible means of obtaining protection ¢ ¢

14.3 Licensing of trade marks ¢ ¢

Contents

Introduction 244

15 1 Thehistoryofpatentlaw 245

15 2 Justificationsforpatentprotection 246

15 3 UnderstandingthePatentsAct1977 246

15 4 OutlineofUKIPOprocedure 248

15 5 Keyissuesinpatentcases 250


15 Introduction to patents


Introduction

The purpose of this chapter is to provide an introduction to the three chapters which follow on the law of patents. It will do so by giving an overview of the development of United Kingdom patent law and the external influences on the Patents Act 1977 which affect its interpretation. We shall also take the opportunity to reconsider the justifications of the patent system, previously discussed in Chapter 2.

In order that you may better understand how patents are obtained, a brief overview of United Kingdom Intellectual Property Office procedure will be given (throughout this chapter referred to as UKIPO). This is, however, merely background information and not examinable as such.

Many students find the law of patents challenging. They believe that the facts of patent cases are difficult to understand (especially if they do not have a science background) and because of this, ‘techno-fear’ gets in their way. This chapter aims to overcome these challenges by identifying the key issues which need to be resolved in patent cases. By understanding these issues (which are straightforward), you will begin to appreciate that the basic rules of patent law are not that difficult. Mastering these issues will give you the confidence you need to study the remaining three chapters.


u summarise the historical and external factors which have influenced United Kingdom patent law

u discuss the theoretical justifications for the patent system

u explain in outline the procedure whereby United Kingdom patents are granted

u explain the meaning of key concepts likely to be encountered in patent cases

u list the issues which are likely to require determination in a typical patent case.

Intellectual property 15 Introduction to patents page 245

15.1 The history of patent law

Essential reading ¢ Bainbridge, Chapter 11: ‘Patent Law - Background, Basic Principles and Practical

Aspects’ pp.380–81.

¢ Bently and Sherman, Chapter 14: ‘Introduction to Patents’ pp.336–39.

¢ Cornish, Chapter 3: ‘Growth and Purpose of Patents’ paras 3-04 to 3-12.

¢ Norman, Chapter 4: ‘Introduction to Patents’ section 4.1.

The word ‘patent’ derives from the Latin phrase ‘literae patentes’ meaning ‘open letter’. It reflects the practice of the Crown in England from the Middle Ages onwards to grant monopolies to individuals by way of an open letter to which the Great Seal was affixed. Such monopolies might relate to a new product or new way of making an existing product (and were intended to encourage the importation of skilled labour and technology with a view to promoting local manufacture), but equally could confer a trading monopoly over an everyday item (such as playing cards) upon a favoured courtier.

Patents have existed for many centuries and were by no means exclusive to England. Indeed, it is arguable that the Tudor practice was influenced by legislation elsewhere in Europe, for example, the Statute of Venice 1474. Criticism of the overuse of patents by Elizabeth I led to legal challenges (as an example see Darcy v Allin (Case of Monopolies) (1602) 11 Co Rep 84b). Conversely, where the monopoly resulted in the acquisition of new technology, the courts were prepared to uphold the grant as valid (Clothworkers of Ipswich Case (1615) Godbolt 252). Disquiet in Parliament led to the enactment of the Statute of Monopolies 1623 which encapsulated these two cases. Section 1 declared all monopolies to be ‘altogether contrary to the laws of this realm, and... void’, but section 6 contained an exception for ‘any manner of new manufacture’. Section 6 was, until 1977, the only substantive provision on patent law in the United Kingdom, and (surprisingly) is still in force today. The law of patents (and indeed intellectual property generally) is therefore built on an exception to the principle that monopolies are bad.

Like many areas of commercial law, the law of patents was primarily shaped by nineteenth century events. Legislation was concerned exclusively with procedural improvements to the patent system (you will find further details in Cornish), thereby responding to the effect of the Industrial Revolution. This stimulated greater use of the patent system by inventors. Apart from concerns about the lack of efficiency in the patent system, there was at the same time vigorous debate about whether there should be patents at all. Some (principally those who favoured free trade) called for their abolition, believing that they stifled innovation. Nevertheless, the system survived and remained largely unchanged until 1977. The revolutionary effect of the Patents Act 1977 is explained below.

Activity 15.1Read the accounts in Cornish or Bently and Sherman of the development of United Kingdom patent law. Then write a concise summary of what you have read.



15.2 Justifications for patent protection

Essential reading ¢ Bainbridge, Chapter 11: ‘Patent Law - Background, Basic Principles and Practical


¢ Bently and Sherman, 14: ‘Introduction to Patents’ pp.339–41.

¢ Cornish, Chapter 3: ‘Growth and Purpose of Patents’ paras 3-36 to 3-53.


¢ Chapter 2 of this subject guide.

¢ Machlup, F. and E. Penrose ‘The Patent Controversy in the Nineteenth Century’ (1950) 10 J of Economic History 1.

You will recollect from Chapter 2 the justifications which are advanced for the protection of intellectual property in general. Further discussion of the reasons why there should be a system to protect inventions can be found in the textbooks: the ones by Cornish or Bently and Sherman should be studied. These reasons are sometimes rehearsed in case law: as examples, see Lord Oliver in Re Asahi KKK’s Patent [1991] RPC 485 at 523; the Court of Appeal in Dranez Anstalt v Hayek [2003] FSR 561 at para 25; and the Court of Appeal in Eli Lilly and Company v Human Genome Sciences Inc [2010] EWCA Civ 33. You should keep these justifications in mind when you study the chapters which follow on patentability, employee inventions and infringement, and you should consider from time to time whether the law does indeed match them.

Activity 15.2Go over your notes from Chapter 2 about the justification for intellectual property rights. Then read the article by Machlup and Penrose listed above. From that article draw up a concise summary of the justifications for the patent system.

15.3 Understanding the Patents Act 1977

Essential reading ¢ Bently and Sherman, Chapter 14: ‘Introduction to Patents’ pp.341–57.

¢ Cornish, Chapter 3: ‘Growth and Purpose of Patents’ paras 3-54 to 3-58; 3-13 to 3-35.

¢ Norman, Chapter 4: ‘Introduction to Patents’, section 4.3.

¢ Patents Act 1977 section 130(7).

The Patents Act 1977 was enacted primarily to give effect to the United Kingdom’s obligations under three international treaties.

u The Patent Co-operation Treaty 1970 (PCT). This Convention (administered by WIPO) creates a procedural mechanism assisting the intending patentee who wishes to obtain protection in more than one state by enabling a single application to be made, which is then subjected to an international search and preliminary examination before being turned into a bundle of national applications for all PCT Contracting States unless the applicant ‘opts out’ of protection in particular countries. The PCT is not on the syllabus and you should simply be aware that it exists.

u The European Patent Convention 1973 (EPC). The revised version of this, EPC 2000, came into force on 13 December 2007, the same date on which the amendments made to the Patents Act 1977 by the Patents Act 2004 to comply with EPC 2000 became operative. The rest of the Patents Act 2004 (making changes to domestic law) came into force on 1 January 2005. Remember the EPC is not an EU measure, but is an instrument of the Council of Europe in Strasbourg. Membership of the Convention is open to any country belonging to the Council of Europe, but patent


applicants need not be citizens of these states. It creates a centralised search, examination and grant for a European patent at the European Patent Office (EPO), hence one application produces a bundle of parallel national patents, by-passing national patent offices. Once granted, European patents are treated as national patents, so that infringement actions are heard by local courts.

u The Community Patent, now called the EU Patent. The intention was that there should be a unitary patent for the whole of the EU, as a special type of European patent granted by the EPO. Originally, this was to have been achieved by means of the Community Patent Convention 1975. However, so little progress was made in ratification that the EU Commission decided in 2000 to reactivate the process by using a different legal instrument, namely the Community Patent Regulation (this is the same means used to create the Community Trade Mark and the Community Design). Again, little progress was made in completing the legislative process. The ratification of the Lisbon Treaty in December 2009 appears to have enabled the proposed EU Patent to be reactivated. This is due to the addition of a new Article 118 in the Treaty on the Functioning of the European Union (TFEU) (formerly the Treaty of Rome) which enables the creation of European intellectual property rights in the context of the establishment and functioning of the internal market. Such legislation is to be effected by the European Parliament and Council under what used to be called the ‘co-decision procedure’ (now referred to as the ordinary legislative procedure under the Lisbon Treaty) which requires a qualified majority rather than unanimity. The new proposal to achieve the EU Patent entails, first, the enactment of a Regulation under Article 118 TFEU: the underlying assumption is that the EU itself will accede to the EPC, so that in future the EU would be a ‘Contracting State’ for which a European patent will be granted. When a successful patent applicant has requested protection for a European patent in one EU Member State, a unitary patent for the whole of the EU will be granted. The current version of the draft EU Patent Regulation was published in November 2009. The second strand of the proposal will require the EPC to be amended as indicated above. Third, there is to be a European and EU Patents Court System which would have exclusive jurisdiction in respect of validity and infringement issues concerning European and EU patents. The final strand in the creation of an EU patent is the thorny issue of translation. The EU Council has proposed that this be dealt with by a separate Regulation under the second paragraph of Article 118 TFEU which will require unanimity.

The 1977 Act is therefore a hybrid creature. It introduced substantive provisions on patentability and exclusions therefrom (derived from the EPC) into domestic law for the first time, as well as a statutory definition of infringement derived from the wording of the then Community Patent Convention (the relevant wording now appears in the 2009 draft EU Patent Regulation). As a result of the definition of ‘patentable invention’ in section 1, the grounds of revocation in section 72 are different from those applying before. The Act also introduced, as a purely domestic measure, rules on the ownership of inventions made in the course of employment and a scheme of compensation for employee-inventors.

The fact that the content of the 1977 Act is influenced by international conventions has an effect upon its interpretation. This is ensured by the wording of section 130(7). Read this section now. Observe how it declares that certain key sections (specifically those on patentability, infringement and revocation) are deemed to have the same effect in the United Kingdom as the corresponding provisions of the above conventions have in other states to which those conventions apply. In plain English, United Kingdom courts are to have regard to how courts in other countries interpret the EPC. In particular, they should have regard to the decisions of the EPO Boards of Appeal with regard to patentability (see Merrell Dow v Norton [1996] RPC 76 at 82 per Lord Hoffmann; and Bristol-Myers Squibb v Baker Norton Pharmaceuticals Inc [1999] RPC 253 at 272–3 per Jacob J). Notice should be taken on how German courts have dealt with the interpretation of patent claims: Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667 at paras.72–75 per Lord Hoffmann and Conor Medsystems v Angiotech Pharmaceuticals Inc [2008] RPC 716 at para 3, again per Lord Hoffmann.


SummaryThe Patents Act 1977 has been described as a ‘culture shock’ to United Kingdom patent lawyers. Previous legislation was procedural only. The 1977 Act contains provisions dealing with the substantive law of patents for the first time. These provisions are heavily influenced by three major international documents, the Patent Co-operation Treaty, the European Patent Convention and the draft EU Patent Regulation. United Kingdom courts are required to take these documents into account when interpreting domestic patent law.

15.4 Outline of UKIPO procedure

Essential reading ¢ Bainbridge, Chapter 11: ‘Patent Law – Background, Basic Principles and Practical


¢ Bently and Sherman, Chapter 15: ‘The Nature of a Patent’ pp.358–69 and Chapter 16: ‘Procedure of Grant of a Patent’ pp.370–90.

¢ Cornish, Chapter 4: ‘The Patent; Grant and Content’ paras 4-01 to 4-36.

¢ Norman, Chapter 4: ‘Introduction to Patents’, section 4.4.

The information which follows on the steps taken in obtaining patent protection in the United Kingdom is intended as background information only. You will not be expected to remember it for the examination. It is provided simply so that you can understand some of the terminology you will encounter in case law. Several of the textbooks contain quite detailed flow charts that you might find helpful.

In essence, there are five key stages in the procedure to obtaining patent:

u filing the application

u publication

u search and preliminary examination

u substantive examination

u grant.

15.4.1 Filing the applicationUnder section 7, anyone can apply for a patent, although it can only be granted to the inventor or their successor in title. Any disputes as to entitlement are resolved by UKIPO under powers set out in the 1977 Act.

Section 14(2) requires every patent application to contain certain items. Read section 14(2) now. Two words require further explanation, namely ‘specification’ and ‘claims’.

The specification is the name for the patent document. It will consist of a description of the invention, any relevant drawings, and one or more claims. An example of a patent specification can be found in Bainbridge. It is deemed to be addressed to an imaginary person called ‘the skilled addressee’ (see below). Section 14(3) of the Patents Act 1977 requires the specification to disclose the invention ‘in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the art’. This is known as sufficiency. Sufficiency relates to the clarity of the description of the invention, not the claims.

Lack of sufficiency is a ground of revocation under section 72(1)(c) (explained in Chapter 18). Examples of lack of sufficiency include:

u Monsanto Company v Merck & Co Inc [2000] RPC 709 (there was no guarantee that the skilled addressee, carrying out the instructions in the description, would produce a class of pharmaceutical compounds which had the desired characteristics, namely anti-inflammatory drugs which did not have particular side-effects)


u Kimberley-Clark Worldwide Inc v Procter & Gamble Ltd, Pumfrey J, 21 July 2000 (a patent for a new type of disposable nappy was insufficient because the skilled addressee, performing the various tests for absorbency set out in the description, would have arrived at contradictory results)

u Novartis AG v Johnson & Johnson Medical Ltd [2009] EWHC 1671 (Pat) (the skilled addressee would not be able to carry out the invention without prolonged research: the patent claimed extended wear contact lenses by reference to certain characteristics such as ophthalmic compatibility, corneal health and wearer comfort, and to physical parameters such as oxygen transmission and ion permeability; achieving both sets of objectives was too much to expect).

However, the House of Lords has stated that the requirement of sufficiency should not be overstated. In Conor Medsystems v Angiotech Pharmaceuticals Inc [2008] RPC 716 it said that disclosing that the invention works, and how to perform it, is different from explaining why it works. The latter is not required.

Under section 14(5), the claim or claims are required to define the matter for which the applicant seeks protection, be clear and concise, be supported by the description and relate to one invention or a group of inventions so linked as to form a single inventive concept. As a result of section 60 of the Patents Act 1977, claims may relate to a product (a thing) or a process (how to make something or do something or use something). A patent may have all product claims or all process claims or have a mixture of claims; thus a pharmaceutical patent may have claims both for a new compound and how to make it.

Under section 15, the filing date of the patent will be the date on which certain minimum formalities are satisfied. The filing date is to be treated as the ‘priority date’ unless the application is based on an earlier Convention application. Under section 5, this will occur where the United Kingdom application is based on an earlier filing in respect of the same subject matter in another contracting state of the Paris Convention (claiming convention priority was explained in Chapter 3). If this is the case, the priority date of the United Kingdom application is in effect backdated to the filing in the other Convention country. The priority date of a patent is of crucial importance, as it is the date on which the validity of the patent is assessed (see Chapter 16).

15.4.2 PublicationEighteen months after filing, the application is published in the Patents Journal. The date of publication is significant in relation to infringement, as once the patent has been granted, the patentee can sue for any acts of infringement committed between the publication date and the date of grant (Patents Act 1977 section 69). If the patent contains information prejudicial to public safety, publication can be prohibited under sections 22 and 23. Unlike EPO procedure, there is no system of opposition, but third parties can make observations to UKIPO under section 21.

15.4.3 Search and preliminary examinationUnder section 17(4), the patent office examiner shall make such investigation as is reasonably practicable and necessary to identify the documents needed for substantive examination to determine whether the invention is new and contains an inventive step. Under section 15A (inserted into the 1977 Act by the Regulatory Reform (Patents) Order 2004), the examiner shall determine whether the application complies with the formal requirements of the Act.

15.4.4 Substantive examinationUnder section 18, the patent application is examined as to whether it complies with the substantive requirements of novelty and inventive step in the light of the search report produced by UKIPO under section 17.


15.4.5 GrantIf the application is successful, then upon payment of the correct fee the patent will be granted (section 18(4)). The grant must be made within a maximum period of four-and-a-half years from the priority date. The fact that the patent has been granted is published in the Patents Journal (section 24). It will last for a maximum of 20 years, calculated from the filing date of the application (section 25), but from the fifth year onwards, its continued existence is subject to the payment of annual renewal fees, which increase with each year of the life of the patent.

15.5.6 AmendmentA patent applicant can always seek to amend the patent application during the course of its progress through UKIPO procedure (see sections 17, 18 and 19). Similarly, a patent can be amended once it has been granted (see section 27, 73 and 75). However, there are restrictions on amendment in section 76. In essence, the patentee cannot extend the description so as to disclose additional matter and cannot expand the scope of protection in the claims. Any amendment which so broadens the patent is a ground of revocation under section 72(1)(d) and (e). Whether an amendment has such a broadening effect is determined through the eyes of the skilled addressee (Re Flexible Directional Indicators Application [1994] RPC 207; Bonzel v Intervention (No 3) [1991] RPC 553).

SummaryThe five steps in obtaining a United Kingdom patent are filing, publication of the application, search and preliminary examination, substantive examination and grant. Publication occurs within 18 months of filing. Grant occurs within four-and-a-half years of the filing date. The patent’s validity is assessed in the light of the state of the art at the priority date, which may be the actual United Kingdom filing date or, where Convention priority is claimed, the date of the first filing for that patent in any contracting state of the Paris Convention.

Self-assessment questions1. Why is the date of publication of a patent application important?

2. What is ‘sufficiency’?

3. Can an application contain a mixture of product and process claims?

15.5 Key issues in patent cases

Essential reading ¢ Bently and Sherman, Chapter 20: ‘Internal Requirements for Patentability’

pp.513–18.

¢ Cornish, Chapter 4: ‘The Patent; Grant and Amendment’ paras 4-37 to 4-50.


¢ Patents Act 1977 sections 125, 130(1).

¢ EPC 2000 Article 69 and the Protocol to Article 69.

¢ Dyson Appliances Ltd v Hoover Ltd [2001] RPC 473.

When you read patent cases, you will find that certain issues frequently arise. We deal with them here by way of introduction.

15.5.1 The inventive conceptOne of the tasks which a court dealing with a patent infringement action has to undertake is to decide what the patent is all about. This is usually referred to as ‘identifying the inventive concept’. Some cases call it the ‘epitome’ of the invention (Dyson Appliances Ltd v Hoover Ltd [2001] RPC 473), others describe the process as


identifying the essence of the invention (Unilever v Chefaro [1994] RPC 567 at 580 per Jacob J; H Lundbeck A/S v Generics (UK) Ltd [2009] RPC 407 (HL) at para 30). Identifying the inventive concept is done by construing the claims in the light of the description of the invention. However, when doing so the court should expressly or by implication take into account the problem that the patentee was trying to solve (Biogen Inc v Medeva plc [1997] RPC 1at 45 per Lord Hoffmann). As an example of how the court used the problem and solution test (as it is called) to identify the inventive concept see Wheatley (Davina) v Drillsafe Ltd [2001] RPC 133.

SummaryOne of the first tasks of the court in any patent litigation is to identify the inventive concept or essence of the invention. This is done by reading the patent claims in the light of the description and by identifying the problem that the inventor was trying to solve.

15.5.2 The skilled addressee and their common general knowledgeA patent specification is a unilateral statement by the patentee. The specification both describes the invention and demarcates the scope of the monopoly which the patentee wishes to claim as theirs. However, the patent specification does not exist in a vacuum: it is deemed to be addressed to the skilled addressee.

The role of the skilled addressee in patent law

The skilled addressee is a judicial construct, a legal fiction. S/he is not a real person, but a hypothetical creature through whose eyes various issues in patent law are determined. The reason for having such a person is to impart objectivity (Lilly Icos Ltd v Pfizer Ltd [2001] FSR 201 at para 62). When you read the chapters which follow, you will discover that the skilled addressee is used by the judges to:

u construe the claims of the patent in the light of the description of the invention and any drawings contained in the patent specification

u determine whether an invention is new or (to put this another way) whether the prior art contains enough information by way of enabling disclosure that the skilled addressee could have put the invention into effect before the priority date (this will affect whether the patent is or is not valid)

u determine whether an invention possesses inventive step, that is, it was not obvious to the skilled addressee (this will affect whether the patent is or is not valid)

u determine whether the description of the invention is sufficient (this will affect whether the patent is liable to revocation for lack of sufficiency)

u determine whether an invention has been the subject of an impermissible amendment, so that it is liable to revocation for having extended the description or claims

u determine whether an invention has been infringed by a product or process which is not literally within the wording of the claims.

Characteristics of the skilled addressee

The qualifications and level of experience of the skilled addressee are for the court to determine in each case. These will vary depending on the field of technology with which the patent is concerned and how advanced the invention is. In the case of mechanical patents the skilled addressee is likely to be a graduate engineer in the relevant discipline with practical experience in the field in question (Dyson Appliances Ltd v Hoover Ltd [2001] RPC 473). Where the patent involves genetic engineering, as in Re Genentech’s (Human Growth Hormone) Patent [1989] RPC 613, the skilled address will be a team of postdoctoral researchers experienced in recombinant DNA; where it involves hand-held devices for accessing the internet, the skilled addressee is likely to have a Master’s degree in information technology (Research in Motion UK Ltd v Inpro Licensing SarL [2006] RPC 517).


The characteristics and abilities of the skilled addressee have also been explained by the judges. Such a person is:

… deemed to have looked at and read publicly available documents and to know of public uses in the prior art. He understands all languages and dialects. He never misses the obvious nor stumbles on the inventive. He has no private idiosyncratic preferences or dislikes. He never thinks laterally. He differs from all real people in one or more of these characteristics … (Lilly Icos Ltd v Pfizer Ltd [2001] FSR 201 at para 62).

Such a person does not possess a spark of inventiveness (per Lord Reid in Technograph v Mills & Rockley [1972] RPC 346 at 355) but is sufficiently interested in his/her work to want to improve on the prior art (per Oliver LJ in Windsurfing International v Tabur Marine [1985] RPC 59, at 69–71). The skilled addressee is expected to try experiments which appear to him/her to be technically rather than commercially worthwhile (Hallen v Brabantia [1991] RPC 195). Where the technical field is very advanced (such as biotechnology), the addressee is to be credited with sufficient time and the best available equipment to carry out the work (Genentech Inc’s Patent [1989] RPC 147).

Recent cases have described the skilled addressee as ‘determined but prosaic’ (Koninklijke Philips Electronics NV v Princo Digital Disc GmbH [2003] EWHC 1598); and a ‘nerd’, ‘if real, would be very boring’ but ‘not a complete android’ (per Jacob LJ in Rockwater Ltd v Technip France SA (formerly Coflexip SA) [2004] RPC 919 CA, at paras.6–15). The skilled addressee will possess the prejudices of others working in that field of technology. In Dyson Appliances Ltd v Hoover Ltd [2001] RPC 473, the vacuum cleaner industry accepted without question that vacuum cleaners without dust collecting bags would not work. The court held that the skilled addressee would have such a ‘mind set’ when reading the claimant’s patent.

Last, the skilled reader of the patent may be a team (Valensi v British Radio Corporation [1972] RPC 373 at 450; Re Genentech’s (Human Growth Hormone) Patent [1989] RPC 613). Even if not in a team, the skilled addressee may well consult another for technical help in understanding the patent. As an example, see Vericore Ltd v Vetrepharm Ltd, [2003] EWHC 111 where the patent involved the use of chemicals to treat sea-lice in fish. It was said that the skilled addressee would be either a toxicologist or a fish health expert and the one would consult the other.

Frequently the courts warn against assuming too high a level of qualifications and ability on the part of the skilled addressee. The skilled addressee is not to be equated with specialist witnesses called by the claimant and defendant to assist the court. The former is meant to be the average technician in the area to which the patent relates. These latter individuals are usually experts in their field.

Common general knowledge

The skilled addressee is deemed to come equipped with certain background information. This is called ‘common general knowledge’. Note that the phrase contains the words ‘common’ and ‘general’. These should tell you something about the nature of what the skilled addressee already knows before they are used by the court to determine one or more of the issues listed above.

Again, there are numerous judicial explanations of what the phrase ‘common general knowledge’ means. The leading explanation is by Sachs LJ in General Tire v Firestone [1972] RPC 457 at 497, 500 where he described it as standard texts or material accepted without question by those in that line of work. Common general knowledge, however, does not include prior patents.

Other descriptions of common general knowledge include ‘the technical background of the notional man skilled in the art’ (Raychem Corporation’s Patent [1998] RPC 31, [1999] RPC 497, CA); ‘a good basis for further action’ (Wheatley (Davina) v Drillsafe Ltd [2001] RPC 133, per Aldous LJ); and ‘good background technical knowledge’ (Rockwater Ltd v Technip France SA (formerly Coflexip SA) [2004] RPC 919 per Jacob LJ at paras 16–21). Where the patent involves sophisticated technology, common general knowledge may be worldwide (Re Genentech’s (Human Growth Hormone) Patent [1989] RPC 613).


Frequently the courts warn against assuming too high a level of common general knowledge. The fact that something is known to some or indeed recorded doesn’t make it common general knowledge and the court should be sensitive to the fact that not all skilled readers will have equal access to information (Beloit Technologies v Valmet Paper Machinery [1995] RPC 705, [1997] RPC 489). The knowledge which the skilled reader possesses should be both common and general to the average person in that field of technology.

Self-assessment questions1. Summarise the role of the skilled addressee in patent law.

2. What are the characteristics of the skilled addressee?

3. What is meant by ‘common general knowledge’?

SummaryThe skilled addressee is a hypothetical person used by the court to determine objectively a number of issues in patent law. They are the average skilled person working in the area of knowledge to which the patent relates. They will be appropriately qualified and have practical experience, but this will vary from case to case depending on the nature of the invention. The skilled addressee comes equipped with the common general knowledge of those working in that area of technology. This is good background information, known to and accepted without question by all.

15.5.3 The role of patent claimsThe claims of a patent fulfil a vital role. They are the patentee’s attempt to demarcate the scope of the monopoly. By analogy with land law, a map will show the boundaries of an owner’s fee simple estate. In the case of a patent, there is no pictorial means of showing the patentee’s territory. Instead, this must be done in words. The claims are important in two particular respects. They are compared with the prior art in order to determine whether the patent is valid, and they are compared with the alleged infringement in order to determine whether the defendant’s product or process falls within the territory marked out by the patentee’s words.

All this flows from certain key statutory provisions. Read section 125 of the Patents Act now, together with the definition of ‘patent’ in section 130(1). Observe how the former incorporates Article 69 of the European Patent Convention together with the Protocol thereto into United Kingdom patent law. Note also how the two provisions link the words ‘patent’, ‘invention’ and ‘patented invention’, and that an invention and its scope is to be determined entirely by the wording of the claims. The claims are everything. They determine what is the invention in respect of which the patent has been granted and the scope of protection to be accorded to that invention. The same construction of the claims has to apply for all the purposes listed above in which the skilled addressee is used in patent law, which is why a court will attempt to construe the claims at a fairly early stage of its judgment. The claims are to be read purposively through the eyes of the skilled reader. The court should ask but one question: ‘what would a person skilled in the art have understood the patentee to have used the language of the claim to mean’ (Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667 at para 34 per Lord Hoffmann.

Self-assessment questions1. Summarise the role of the claims in a patent document.

2. How are claims to be interpreted?

Useful further reading ¢ Fisher, M. ‘The Tyranny of Words’ [2007] Common Law World Review 262.


Activity 15.3Read the judgment of Dyson v Hoover. Then write a summary of how the judge in that case (Michael Fysh QC) deals with the dispute between the parties.

Note the action plan suggestion given in the feedback.


u summarise the historical and external factors which have influenced United Kingdom patent law

u discuss the theoretical justifications for the patent system

u explain in outline the procedure whereby United Kingdom patents are granted

u explain the meaning of key concepts likely to be encountered in patent cases

u list the issues which are likely to require determination in a typical patent case.

Sample examination questionsThe subject matter of this chapter forms an integral part of the substantive law of patents set out in Chapters 16 and 18. You should be aware that the Examiner may set multi-part ‘bookwork’ questions to test your understanding of and critical appreciation of key concepts of patent law. Although most of these concepts are dealt with later in this subject guide, a few have been dealt with in this chapter. You should therefore ensure that you have a good understanding of the contents of this chapter, as part-questions could be set in on the skilled addressee, the role of the claims, and the meaning of key words such as ‘inventive concept’, ‘common general knowledge’ and ‘sufficiency’. If need be, you should return to this chapter once you have completed the remaining three chapters in this subject guide.


Reflect and review








Need to study again

I can list the principal types of intellectual property rights and describe in general terms the key features of each of them.

¢

¢

¢

I can set out the principal characteristics of all intellectual property rights.

¢ ¢ ¢

I can explain the reasons which are put forward to justify the existence of intellectual property rights.

¢

¢

¢

I can explain what is meant by the term ‘unfair competition’ and why United Kingdom courts have traditionally refused to recognise this as a separate form of harm.

¢

¢

¢

I can define the following: patent, copyright, design, trade mark and confidential information.

¢ ¢ ¢


Must revise

Revision done

15.1 The history of patent law ¢ ¢

15.2 Justifications for patent protection ¢ ¢

15.3 Understanding the Patents Act 1977 ¢ ¢

15.4 Outline of UKIPO procedure ¢ ¢

15.5 Key issues in patent cases ¢ ¢


Notes

Contents

Introduction 258

16 1 Themeaningof‘aninvention’ 259

16 2 Excludedsubjectmatter 259

16 3 Novelty 267

16 4 Inventivestep 270

16 5 Capableofindustrialapplication 272


16 Patentability


Introduction

The purpose of this chapter is to deal with the criteria for patentability. These are relevant both when deciding whether something is capable of patent protection, and in the context of an infringement action where a defendant alleges that the claimant’s patent should be revoked for invalidity. It is important therefore that you master this chapter before you approach the material in Chapter 18, where revocation will be considered.

The patentability of an invention, as defined by the Patents Act, comprises four elements, three positive and one negative. The positive ones are that the invention possesses novelty, inventive step and industrial applicability. The negative criterion is that it must not consist of excluded subject matter. All four elements are the subject of an extensive body of case law, some of which emanates from the Boards of Appeal of the European Patent Office (EPO). It is important that you make the effort to read the cases, even if some of the technology discussed in them seems difficult. You should concentrate on the legal principles established by these cases.

When reading the provisions of the Patents Act 1977 dealing with patentability, you should bear in mind their origin in the European Patent Convention (EPC). United Kingdom judges are now in the habit of referring directly to the wording of the EPC rather than the Act itself, and it is a habit which you should consider.


u explain the grounds on which an invention may be denied patent protection, and discuss the underlying public policy behind each of the exclusions from and exceptions to patentability

u explain the requirement of novelty in patent law and apply the judicial tests for lack of novelty in problem questions

u explain what is meant by the requirement of inventive step, and apply the test established in case law in problem questions

u explain what is meant by the requirement that an invention must be capable of industrial application

u list the criteria for patentability.

Intellectual property 16 Patentability page 259

16.1 The meaning of ‘an invention’

Essential reading ¢ Bainbridge, Chapter 12: ‘Requirements for Patentability’ pp. 417–18

¢ Norman, Chapter 5: ‘Patentability’ sections 5.1 and 5.2

¢ Section 1 Patents Act 1977.

¢ Biogen v Medeva [1997] RPC 1; HITACHI/Auction method [2004] EPOR 548.

The elements which go to make up a patentable invention are set out in section 1 of the Patents Act 1977 which is based on Article 52 EPC. Read these two provisions carefully now. A debate in some of the cases is whether there is a separate requirement of ‘an invention’ which must be satisfied before a patent can be granted or whether an invention is simply a combination of all the elements in section 1. The United Kingdom cases in which it has been said that there is a separate requirement of an invention have all involved recombinant DNA technology: as an example, see Genentech Inc’s Patent [1989] RPC 147, in particular the judgment of Mustill LJ. A contrasting view by a differently constituted Court of Appeal can be found in Chiron Corporation v Organon Teknika Ltd (No 12) [1996] FSR 153, where it was said that an invention is simply the outcome of satisfying the patentability criteria. This later case had the merit of following the thinking at the time of the EPO in HOWARD FLOREY/Relaxin [1995] EPOR 541. The opening words of section 1(1) (‘that is to say’) lent support to this approach. The debate continued in Biogen v Medeva [1997] RPC 1 where Lord Hoffmann and Lord Mustill offered opposing views as to whether it was necessary to identify ‘an invention’.

Current case law from the EPO Boards of Appeal regards ‘an invention’ as a separate requirement, a pre-requisite for the examination with respect to novelty, inventive step and industrial application. This is supported by reference to the wording of Article 52 EPC, both in its original (1973) and current (2000) version. There is no explicit definition of ‘an invention’ in the EPC. The EPO has refused to define the term, but has explained that what is an invention is very broad. What matters is the presence of technical character (PBS PARTNERSHIP/Controlling Pension Benefits System [2002] EPOR 522). ‘Technical character’ means that there must be a physical entity or concrete product, man-made for a utilitarian purpose. Non-inventions, on the other hand, are those of an entirely abstract nature, for example theories or mathematical methods or economic calculations. The current thinking of the EPO Boards of Appeal is to be found in PBS PARTNERSHIP/Controlling Pensions Benefit System [2002] EPOR 522; HITACHI/Auction method [2004] EPOR 548 and DUNS LICENSING ASSOCIATES/Estimating Sales Activity [2007] EPOR 349.

Activity 16.1Read the opinions of Lord Mustill and Lord Hoffmann in Biogen v Medeva [1997] RPC 1. What does each say about the word ‘invention’? Do their respective views suggest any judicial disquiet about the granting of patents in respect of living matter?


16.2 Excluded subject matter

Essential reading ¢ Bainbridge, Chapter 12: ‘Requirements for Patentability’ pp.446−72; 427−49.

¢ Bently and Sherman, Chapter 17: ‘Patentable Subject Matter’ pp.391−463.

¢ Cornish, Chapter 5: ‘Validity’ paras 5-54 to 5-83.

¢ Norman, Chapter 5: ‘Patentability’ sections 5.3 and 5.4.

¢ Patents Act 1977 sections 1(2), section 1(3) and Schedule A2, section 4.


¢ EPC Articles 52 and 53.

¢ Directive 98/44 on the legal protection of biotechnological inventions.

¢ Cases: VICOM/Computer related invention [1987] EPOR 74; Re Fujitsu’s Application [1997] RPC 610; HARVARD/Onco Mouse [1990] EPOR 501; Case C-377/98 Kingdom of the Netherlands v European Parliament and Council of the European Union [2001] ECR I-7079.

¢ Crespi, S. ‘Biotechnology Patenting: the Wicked Animal Must Defend Itself’ [1995] EIPR 431.

¢ Crespi, S. ‘Patenting and Ethics – A Dubious Connection’ (2003) 85 JPTOS 31.

¢ Drahos, P. ‘Biotechnology Patents, Markets and Morality’ [1999] EIPR 441.

Overview

Two Articles in the EPC deal with what cannot be patented, namely Article 52(2) and Article 53. The former contains the list of exclusions from patentability. The latter was revised in 2000 with the objective of bringing all the exceptions to patentability together in a single article.

The equivalent provisions in the Patents Act 1977 are, first, section 1(2) which deals with excluded subject matter. The EPO has stated that the common denominator is the lack of technical character. Examined closely, however, the list of excluded items is not a logical class (Re CFPH LLC’s Application [2006] RPC 259). The enactment of Article 53 EPC 2000 is not in a single subsection, but is to be found in section 1(3), Schedule A2 and section 4A. Here the common denominator is that although the subject matter of the invention possesses technical character, it is denied patent protection for reasons of public policy.

16.2.1 Exclusions from patentabilityThe list of items excluded from patentability are set out in section 1(2) of the Patents Act 1977, based on EPC Article 52. Read both of these provisions now. Observe how the list is qualified by a proviso. You will probably find the wording of the EPC easier to understand, that is, that ‘patentability is only excluded to the extent to which the patent relates to such subject matter or activities as such’. The qualification ‘as such’ therefore needs to be read into each paragraph of section 1(2). When applying section 1(2), you should remember that everything depends on the wording of the claims. It is the claims which define the subject matter of the invention (section 14(5)). This means it is up to the patentee to word the specification in such a way that it avoids the various exclusions.

The meaning of ‘as such’

The way the phrase ‘as such’ is to be interpreted was originally explained by the EPO in VICOM/Computer related invention [1987] EPOR 74. This states that the ‘whole contents’ approach should be adopted. The patent is to be read as a whole to see if it achieves a technical advance, rather than ignoring those aspects which are excluded from protection and then assessing whether what remains is patentable. The emphasis is on what the invention does, that is, whether it makes a technical contribution to solving a problem. If it is merely a quicker way of performing a task which has been done previously by hand or by the human mind, then even if this results in efficiency it is not a patentable invention: Re Fujitsu’s Application [1997] RPC 610 (CA). The VICOM approach was adopted by United Kingdom courts: Genentech’s Application [1989] RPC 147; Re Fujitsu’s Application [1997] RPC 610, although the EPO itself has moved on from VICOM.

The EPO’s current method of approaching the list of exclusions can be found in PBS PARTNERSHIP/Controlling Pensions Benefit System [2002] EPOR 522 and HITACHI/Auction method [2004] EPOR 548. Once it has been determined that there is an ‘invention’, that is, something having technical character, whether that invention falls within the list of exclusions is decided by asking if its technical contribution is obvious. The correct approach therefore is to see if there is an invention. In the former case, the claim for


a method for determining pensions benefits was held not patentable, being caught by the exclusion. The apparatus which made the calculations was not caught by the exclusion, but nevertheless failed because it lacked inventive step. In the latter case, a computerised Dutch auction system, which claimed to overcome the technical deficiencies of previous systems by synchronising key information during the on-line bidding process was held in principle to be an invention and not excluded from patentability, but both the method claims and the apparatus claims were denied protection because they were obvious. The case contains a very clear statement of the EPO’s policy on excluded subject matter. You should read it.

The current United Kingdom thinking is to be found in Aerotel Ltd v Telco Holdings Ltd/Macrossan’s Application [2007] RPC 117. In this case, Jacob LJ set out a four-step formula for dealing with excluded subject matter, namely that, first, one should properly construe the claim; next, one should identify the actual contribution; third, one should ask whether such a contribution fell solely within the list of excluded subject matter; and, last, one should check whether the actual or alleged contribution was actually technical in nature. Subsequently, the EPO criticised this approach in DUNS LICENSING ASSOCIATES/Estimating Sales Activity [2007] EPOR 349 where it repeated its earlier test, namely that one first considered whether there was ‘an invention’. If there is, then the exclusions do not apply, but the invention then has to be assessed for patentability. United Kingdom cases since have struggled to reconcile Aerotel/Macrossan with DUNS LICENSING ASSOCIATES: see Astron Clinica Ltd & others v Comptroller General of Patents [2008] RPC 339 and Symbian Ltd v Comptroller-General of Patents [2009] RPC 1.

The list of exclusions

Going through the four paragraphs of section 1(2) in turn, discoveries, scientific theories or mathematical methods amount to abstract ideas. There is no applied technology. There is, however, a fine dividing line between a patent which claims a discovery and one which claims its practical application. In Chiron v Organon (No 12) [1996] FSR 153 the Court of Appeal held that although the identification of Hepatitis C amounted to a discovery, the patent was valid because what was claimed were testing kits which enabled doctors to identify whether someone had the disease (see also the views of Aldous LJ in Re Fujitsu’s Application [1997] RPC 608). Aesthetic creations (such as architect’s plans – E.S.P.’s Application (1945) 62 RPC 87) are excluded as they are best left to copyright.

Case law on the exclusions in section 1(2)(c) (methods of performing a mental act, etc. and computer programs) demonstrate neatly the technical contribution point in VICOM. In Raytheon’s Application [1993] RPC 427 patentability for an automated ship identification system was denied as the alleged invention merely mechanised a task previously done by the human eye, and in Merrill Lynch’s Application [1989] RPC 561, an automated dealing system was held to be no different than the previous method of trading in securities.

With regard to the computer program exclusion, an overview of the large body of EPO case law is given in Aerotel Ltd v Telco Holdings Ltd/Macrossan’s Application [2007] RPC 117. The initial approach was to ask whether the machine, as programmed, achieved a technical advance: see VICOM and KOCH & STERZEL/X-ray apparatus [1988] EPOR 72. The second phase of the EPO case law stated that the exclusion was only directed to those computer programs which amount to abstract creations lacking in technical character, but that programs which had a technical character were patentable: IBM/Computer programs [1999] EPOR 301. When does a computer program have a technical character? According to the case, a program will be potentially patentable (subject to novelty and inventive step) if it produces additional technical effects going beyond the normal physical interaction between hardware and software. A key feature of the case is the concern expressed by the EPO that the Patent Offices of the USA and Japan were perceived as being more generous towards software patents. UKIPO subsequently published a practice notice expressly adopting the criteria of the EPO in the IBM case. The third phase of the case law can be found in PBS PARTNERSHIP/Controlling Pensions Benefit System [2002] EPOR 522 where the EPO adopted the ‘any hardware’ approach, so that the apparatus used to run a program would be patentable but the process


which operated that equipment would not be. The current thinking is found in DUNS LICENSING ASSOCIATES/Estimating Sales Activity [2007] EPOR 349 which asks first whether there is an invention (something tangible) and then considers whether it is new, inventive and capable of industrial application.

There were a number of United Kingdom decisions on the exclusion relating to computer programs prior to the decision in Aerotel Ltd v Telco Holdings Ltd/Macrossan’s Application [2007] RPC 117. In most of them the patent application was rejected for lack of technical effect. They include Merrill Lynch’s Application [1989] RPC 561 (mentioned above), Re Gale’s Patent [1991] RPC 305 (method of calculating square root stored on ROM) and Re Fujitsu’s Application [1997] RPC 610, CA (which concerned a method of processing crystalline structures by computer which saved chemists the time and trouble of building such structures by hand). In this last case, you should note Aldous LJ’s adoption of VICOM and his general observations about the need for a technical contribution. One (rare) successful case was Quantel v Spaceward Microsystems Ltd [1990] RPC 83, where the patent involved a computerised video graphics system.

It had been expected that the EPC would be revised, by deleting the exclusion for computer programs from Article 52. The reason given for the change was in part the wording of TRIPS Article 27. This change was dependent on the enactment of the draft EU Directive on the patentability of computer-implemented inventions. The draft Directive has been rejected by the EU Parliament, so the likely reform of Article 52 EPC is uncertain.

The last exclusion, in paragraph (d) concerns the presentation of information. Examples of unsuccessful patents in this category include Re Townsend’s Application [2004] EWHC 482 (which concerned an attempt to patent an advent calendar) and Re Crawford’s Patent Application [2006] RPC 345 (which concerned a display system for buses).

One matter you will come across in your reading is the current controversial practice of the US Patent Office in granting business methods patents. UKIPO and the EPO have indicated that they do not intend to follow this.

SummaryThe exclusions from patentability found in section 1(2) of the Patents Act (based on Article 52 EPC) are items which lack technical effect. Each exclusion is qualified by the words ‘as such’. The original method of interpreting the words ‘as such’ was the ‘whole contents’ approach of the EPO in the VICOM case. This required the patent to be read as a whole in order to determine whether it makes a technical contribution. The current approach is that set out in HITACHI which involves asking whether there is an invention (something concrete and man-made) and, if so, whether it then satisfies the requirements of patentability.

16.2.2 Exceptions to patentabilityHere (in theory) the criteria for patentability are met, but the right to obtain a patent is denied for reasons of public policy. All the exceptions are now to be found in Article 53 EPC.

A preliminary point is that this is an area where EU Directive 98/44/EC on the legal protection of biotechnological inventions (hereafter called the Biotech Directive) has had a major impact. The Directive requires Member States to protect biotechnological inventions (Article 1) and declares that inventions which satisfy the criteria for patentability shall be patentable even if they concern a product consisting of biological material (as defined in Article 2) or a procedure whereby biological material is produced (Article 3(1)). Further, biological material which is isolated from its natural environment or which is the subject of a technical process is patentable even if it occurs in nature (Article 3(2)). There are a number of exclusions in Articles 4–6 of the Directive. The Directive has been the subject of an unsuccessful challenge before the ECJ in Case C-377/98 Kingdom of the Netherlands v European Parliament and Council of the European Union [2001] ECR I-7079.


One aspect of the Netherlands case is that it explains the relationship between the Directive and the EPC, the former being an EU legislative measure, the latter being a Convention promulgated by the Council of Europe. The Opinion of the Advocate General and the ruling of the ECJ reveal two things. First, that the EPC Implementing Regulations were modified so as to incorporate the wording of Article 6 of the Directive. Further, when the ECJ rejected the challenge to the Directive on policy grounds, it adopted the case law of the EPO Boards of Appeal (explained below). In effect there has been two-way traffic between the EU and the EPC on the availability of patent protection for living matter. Although each operates its own legal system, they contain the same basic principles.

Patents contrary to public policy

The first exclusion prohibits patents which are contrary to public policy: see section 1(3) of the Patents Act and Article 6(1) of the Biotech Directive. Read the wording of section 1(3) and Article 6(1) now. Then compare this wording with that of Article 27(2) of the TRIPS Agreement and with EPC Article 53(a). Examples of patents contrary to public policy are listed in Articles 5(1) and 6(2) of the Biotech Directive (repeated in Schedule A2, paragraphs 3(a)–(e) of the Patents Act 1977).

There has been no United Kingdom case law on section 1(3). In relation to Article 53(a) of the EPC (the parent provision), the EPO has adopted a robust attitude to attempts to challenge patents on grounds of morality. It has said that so long as a claimed invention has a legitimate use it is not the role of the EPO to act as a moral censor. Simply because the technology is perceived as controversial (for example, using animals to develop a cure for cancer or modifying plants so that they are resistant to disease) is not a bar to the patentability of the subject matter. Although the EPO is required to balance the benefits to society against harm to living matter, the onus is placed on those challenging the patent to adduce evidence of conclusively documented hazards. Even then, it is not for the EPO to monitor or estimate such risks, that is, for the numerous regulatory authorities charged with overseeing research and medical practice. Patent law does not exist to regulate research. These views can be found in four cases, namely HARVARD/Onco Mouse [1990] EPOR 501; PLANT GENETIC SYSTEMS/Glutamine synthetase inhibitors [1995] EPOR 357; HOWARD FLOREY/Relaxin [1995] EPOR 541; LELAND STANFORD/Modified Animal [2002] EPOR 16.

The one decision which goes against this trend is that of the Enlarged Board of Appeal in G 2/06 WARF/Stem Cells [2009] EPOR 129. The patent contained a series of claims involving the use of human embryonic stem cell cultures. By combining Article 53(a) with the text of the Implementing Regulations derived from Article 6(2) of the Biotech Directive, the Board was able to hold that it was not possible to grant a patent for an invention which necessarily involved the use and destruction of human embryos from which the stem cells were derived. It was not the fact of the patenting itself which was contrary to ‘ordre public’, rather it was the performing of the invention, which included a step which contravened that principle. However, it stressed that the decision did not concern the patentability in general of inventions relating to human stem cells or stem cell cultures. It was only concerned with those inventions concerning products which could only be obtained by the use involving the destruction of embryos.

Activities 16.2–16.316.2 Read Schedule A2 paragraphs 1, 2 and 3(a) to (e) of the Patents Act 1977. Then

write a concise summary of the principles to be found there concerning the patenting of living matter.

16.3 Read the decision of the EPO in HARVARD/Onco Mouse and then the later decision in LELAND STANFORD/Modified Animal [2002] EPOR 16. What do these cases tell you about the likely success of any challenge to a patent on the ground that it is contrary to morality?


Animal and plant varieties and biological processes

The second exclusion in EPC Article 53(b) (Patents Act 1977 Schedule A2, paragraph 3(f)) denies patent protection for any variety of animal or plant or any essentially biological process for the production of animals or plants, not being a micro-biological or other technical process or the product of such a process (this wording should be compared with that of the Biotech Directive Article 4 and with TRIPS Article 27(3)(b)).

Under this exclusion, morality aside, the issue is whether it is possible to patent something found in nature. This reflects the difference between a discovery and its technical application (see above). The traditional analysis is to the effect that there is a difference between that found in nature and (a) a process for reproducing that substance in the laboratory and (b) the synthetic equivalent of that substance resulting from the process: see the comments of Lord Wilberforce in Re American Cyanamid (Dann’s) Patent [1971] RPC 425; and American Cyanamid v Berk [1976] RPC 231. This principle is now set out in Article 5(2) of the Biotech Directive.

Paragraph 3(f) contains four separate elements. Again, when you look at this list, you should remember that whether a patent falls within the exception depends on the wording of the claims.

u The first prohibition is against the patenting of animal varieties. The EPO has explained that there is a taxonomy (i.e. system of classification) implicit in the exclusion, namely, in descending order, animals in general, animal species and varieties within that species. Whether a patent relates to an animal variety depends on the wording of the claims. Hence a genetically engineered mouse is not an animal variety: HARVARD/Onco Mouse [1990] EPOR 501.

u The same thinking applies to the second element of paragraph 3(f), plant varieties. As with animal varieties, the issue is to be decided by interpreting the claims. It must be decided whether the patentee has claimed plants generally or a plant variety. Only the latter is caught by the exception. Hence, in LUBRIZOL/Hybrid plants [1990] EPOR 173 it was held that hybrid plants and their seeds were not a ‘plant variety’ because they did not comply with the definition of a variety; and in PLANT GENETIC SYSTEMS/Glutamine synthetase inhibitors [1995] EPOR 357 it was held that genetically modified tobacco plants which were herbicide resistant were not a plant variety. As with the prohibition on patenting animal varieties, the legislative provision contains an implicit taxonomy, whereby a plant variety is the lowest level of the classification system. However, unlike the animal variety exclusion, there is a specific reason why plant varieties cannot be patented, and that is because there is an alternative legal mechanism for protecting plant varieties, which exists under the International Convention for the Protection of New Varieties of Plants 1961 as amended in 1991 (the UPOV Convention).

u The next prohibition is against patenting essentially biological processes. The EPO has stated that the test for whether a patent involves a biological process is whether the claims relate to human, technical intervention or traditional cross-breeding methods. Only the latter are denied patent protection: PLANT GENETIC SYSTEMS/Glutamine synthetase inhibitors [1995] EPOR 357.

However, under the fourth element of paragraph (f), micro-biological processes are deemed patentable. The suggestion from the EPO is that such processes are those which are not visible to the human eye: PLANT GENETIC SYSTEMS/Glutamine synthetase inhibitors [1995] 3 357.

Activity 16.4Go over your notes on the wording of Schedule A2, paragraph 3(f) of the Patents Act 1977 and the EPO cases which have explained this exception to patentability. Morality aside, do you find the reasoning of the EPO logical?



Methods of treatment

Under Article 53(c) EPC, methods of treatment are not patentable. Again, as with the other exceptions, much depends on the wording of the claims. Careful drafting by the patentee’s patent attorney means that the exception can be avoided.

As a result of this exception being moved from Article 52(4) to Article 53, the Patents Act 1977 was altered so that sections 2(6), 4(2) and 4(3) were deleted, with a new section 4A(1) being inserted to implement Article 53(c). Sections 4A(2), (3) and (4) contain the qualifications to the method of treatment exception, namely the patentability of new substances used in medical treatment, and the patentability of first and second medical uses of known substances. Read section 4A as a whole now. Note that the ‘methods of treatment’ exception comprises surgery and therapy (whether on the human or animal body) and methods of diagnosis. The three alternative exclusions are cumulative, so that the claimed method must be neither a therapeutic nor a surgical nor a diagnostic one: G 1/07 MEDI-PHYSICS/Treatment by surgery, EPO Enlarged Board of Appeal, 15 February 2010.

The policy reason underlying the Article 53(c) exclusion is simply that medical practitioners should not be hindered in their treatment of patients by patent protection: Wyeth/Schering’s Applications [1985] RPC 545. Other jurisdictions may permit the patenting of methods of treatment, as the TRIPS Agreement allows Contracting States the option of whether or not to allow such patents: Anaesthetic Supplies Pty Ltd v Rescare Ltd (1994) 122 ALR 141.

What is a method of treatment?Cases decided under the Patents Act 1949 (which contained a similar exception) were full of contradictions. Thus, it was not possible to patent the use of sound waves as an anaesthetic (Neva’s Application [1968] RPC 481) nor a system of abortion (Upjohn (Kirton’s) Application [1976] RPC 324) nor a method of filling teeth (Lee Pharmaceutical’s Application [1975] RPC 51). However, it was possible to patent a system of evaluating health screening tests (Bio-digital’s Application [1973] RPC 668), contraception (Schering’s Application [1971] RPC 337) and a method for making a wound dressing (Nolan’s Application [1977] FSR 435).

It has been held that under the 1977 Act the phrase ‘method of treatment’ is to be given a wide interpretation, so that it would include a system of immunisation (Unilever (Davis’) Application [1983] RPC 219).

The EPO has equally adopted a wide interpretation of Article 53(c) because of its underlying policy reasons. It has stated that methods of diagnosis should be given a broad meaning: in CYGNUS/Diagnostic methods [2006] EPOR 161, it said that if a claim included features relating to the diagnosis for curative purposes representing the deductive medical or veterinary decision phase as a purely intellectual exercise, the preceding steps which are taken in making such a diagnosis, and the specific interactions with the human or animal body which occur when carrying these out, it would be caught by the wording of Article 53(c). Similarly, ‘method of treatment by surgery’ was broadly interpreted in MEDI-PHYSICS/Treatment by surgery, EPO Enlarged Board of Appeal, 15 February 2010. Where the invention comprised a number of steps (as here, injecting a special gas into the heart so that a scanner could take clearer pictures of the patient’s blood flow), the fact that just one of the steps involved a surgical procedure meant that the whole claim was caught by the Article 53(c) exclusion. The Board, however, declined to provide a definition of surgery which would once and for all delimit the exact boundaries of the concept because of the constant developments in medical science.

The EPO has made clear that the treatment does not have to be administered personally by a doctor or vet (DUPHAR/Pigs II [1989] EPOR 10; WELLCOME/Pigs I [1988] EPOR 1). Even so, some of the earlier contradictions have survived, so that cosmetic treatment falls outside the exclusion and so is patentable, as in ROUSSEL-UCLAF/Thenoyl peroxide [1987] EPOR 1 (which involved a treatment for acne) and DU PONT/Appetite suppressant [1987] EPOR 6 (which involved a slimming treatment). One extreme United Kingdom decision is Re Stafford-Miller Ltd’s Application [1984] FSR 258 (where the judge upheld a method of killing ectoparasites on humans as patentable, a patent application described as being ‘on the absolute frontier of the law’).


The exceptions to section 4A(1)

Sections 4A(2), (3) and (4) all qualify section 4A(1). Under section 4A(2), equipment and substances used in methods of treatment can be patented. Without this, we are told, there would be no pharmaceutical industry.

Further, under section 4A(3) (which used to be found in section 2(6) Patents Act), a known substance used for the first time in a method of treatment can be patented: this is because of the wording of Article 54(4) EPC. Read section 4A(3) now. In plain English, it means that where a known substance is used for the first time in a method of treatment (a ‘first medical use’), it can be patented for use in that method of treatment even though the substance itself is not new. Novelty is ‘borrowed’ from its new use, even though the use itself (the method of treatment) cannot be patented.

EPO case law extended this further to cover second and subsequent medical uses (provided such uses were new and inventive): EISAI/Second medical indication [1979-85] EPOR: B: 241. EISAI/Second medical indication has been put on a statutory basis as a result of the new Article 54(5) EPC, enacted by section 4A(4) Patents Act. The EISAI principle was accepted (initially with some reluctance) by United Kingdom courts: Wyeth/Schering’s Applications [1985] RPC 545. An example of a successful second medical use patent is that in American Home Products Corp v Novartis Pharmaceuticals UK Ltd [2001] RPC 159, where the substance rapamycin, used initially as an anti-fungal agent, was found to be beneficial in transplant surgery. However, where a naturally occurring substance (such as taxol, derived from the yew tree, which is used in treating cancer) is the subject of a patent, it is not possible to obtain a further patent after research has identified its optimum dosage, as this is not a second (unexpected) therapeutic use of the substance: Bristol-Myers Squibb Company v Baker Norton Pharmaceuticals Inc [2001] RPC 1. However, both the Court of Appeal and the Enlarged Board of the EPO have since stated that there is nothing in principle to stop the patenting of a dosage regime where this was new and not directed to a method of treatment: Actavis UK Ltd v Merck & Co Inc [2009] 1 WLR 1186; G 2/08 ABBOTT RESPIRATORY/Dosage regime, 19 February 2010. Thus the new use need not be the treatment of a different disease.

If the principle in EISAI was to be utilised, it used to be a requirement that the specification had to contain so-called ‘Swiss form’ claims, namely ‘use of X for the manufacture of a medicament for treatment of Y’. The changes to Article 54 EPC and section 4A(4) Patents Act mean that this is no longer so. Further guidance is available on the UKIPO website.

Activity 16.5Read section 4A Patents Act 1977, together with the decision in Wyeth/Schering’s Applications. Then write a concise summary of the law concerning methods of treatment, the patenting of substances used in methods of treatment, and first and second medical use patents.

SummaryThe exclusions and exceptions to patentability set out in the EPC and in the Patents Act 1977 fall into two distinct groups. First, there are those items which are deemed unpatentable because they are not technical in nature. These are listed in EPC Article 52(2) and section 1(2) of the Patents Act. Second, there are inventions which do have technical effect, but are denied patentability on policy grounds. These are set out in EPC Article 53, together with the provisions in the Biotech Directive, and are incorporated into United Kingdom law by section 1(3) of the Patents Act, Schedule A2 and section 4A.


16.3 Novelty

Essential reading ¢ Bainbridge, Chapter 12: ‘Requirements for Patentability’ pp.418−30.

¢ Bently and Sherman, Chapter 18: ‘Novelty’ pp.464−87.


¢ Norman, Chapter 5: ‘Patentability’ section 5.5

¢ Patents Act 1977 section 2, EPC Article 54.

¢ Cases: General Tire v Firestone [1972] RPC 457, pp.481–506 only; Lux v Pike [1993] RPC 107; UNION CARBIDE/Atmospheric Vaporiser [1991] EPOR 373; Merrell Dow v Norton [1996] RPC 76; Synthon BV v Smithkline Beecham plc [2006] RPC 323.

16.3.1 Novelty: an overviewThe requirement of novelty is set out in section 2 of the Patents Act 1977, based on Article 54 of the EPC. Read these two provisions now. Observe how section 2(1) contains a statement of principle, and section 2(2) defines what is meant by ‘state of the art’. Section 2(4) contains an exception for information obtained in breach of confidence, but only in the period of six months before the priority date of the patent. When considering whether a patent passes the test of novelty, the issues are (according to the House of Lords in Synthon BV v Smithkline Beecham plc [2006] RPC 323):

u whether information in the prior art was accessible (potentially rather than actually) by any member of the public (even one person) without any fetter of confidentiality and if so

u whether that information anticipated the invention, that is, did it contain an enabling disclosure such that the skilled addressee, armed with the prior art, could perform the invention.

These issues are referred to as disclosure and enablement. They should be kept separate and should be dealt with sequentially.

Just as with other areas of patent law, the issue of novelty is determined objectively through the eyes of the skilled addressee. This hypothetical person’s attributes were explained in Chapter 15. Further, novelty is determined by reference to the wording of the claims. It is the claims which are compared with the prior art to see if there is disclosure.

The meaning of ‘the public’ in section 2 was explained by Aldous J in PLG Research Ltd v Ardon [1993] FSR 197: to form part of the state of the art, the information given must have been made available to at least one member of the public who was free in law and equity to use it. This makes clear that ‘the public’ can consist of one person, but the distinguishing characteristic is that the recipient of the information must not be bound by confidentiality. Information obtained in breach of confidence cannot destroy novelty. Hence in UNION CARBIDE/Atmospheric Vaporizer [1991] EPOR 373 (an EPO decision) novelty was not destroyed where an invention located on private property was viewed through a fence and in Re Gallay [1959] RPC 141 there was implied secrecy in the case of a joint venture. However, in Re Dalrymple [1957] RPC 449, the large number of members in a trade association meant that the fact that the word ‘confidential’ was stamped on the front of a document circulated to all had no effect.

Whether the prior art contains an enabling disclosure depends on a comparison of each claim of the patent with each individual item of prior art (it is not possible to combine pieces of prior art for the purpose of attacking a patent for lack of novelty). If the item of prior art does not contain all the elements (or integers) of a claim, then the claim is valid for novelty (but may still be subject to attack for lack of inventive step).

With regard to the application of section 2(2), the 1977 Act changed the previous law on novelty in two respects.

If you are unsure about either what patent claims do or the role of the skilled addressee, you should revisit your notes from Chapter 15.


u Under the 1949 Act, only information available in the United Kingdom was taken into account whereas now information anywhere in the world is relevant.

u Under the 1949 Act, information made available through publication had to contain an enabling disclosure, whereas information made available through prior use did not. As a result, any uninformed prior use of an invention could destroy novelty (as an example see Gore v Kimal [1988] RPC 137). By contrast, the 1977 Act simply requires that the information be ‘made available to the public’, the phrase used in the 1949 Act to define publication. The net result of this is that under the 1977 Act all forms of prior art must contain an enabling disclosure: Re Asahi KKK’s Patent [1991] RPC 485, HL. Consequently, cases decided under earlier legislation on anticipation by prior use should be treated with caution (see to this effect the remarks of Aldous J in PLG Research Ltd v Ardon [1993] FSR 197 at 225). The same approach is taken by the EPO: Availability to the Public [1993] EPOR 241.

16.3.2 What amounts to the prior artThe patent system is basically about information (per Lord Hoffmann in Merrell Dow v Norton [1996] RPC 76). In consequence, what amounts to the prior art requires an understanding of how information can be made available. Information can be obtained through documents, but it can be obtained through the supply of goods, through the use of an item or through its demonstration. In every case, however, the question to be asked is what would the skilled addressee understand from that information.

Documentary prior art will include earlier patents, such as occurred in the two House of Lords decisions of Re Asahi KKK’s Patent [1991] RPC 485 and Merrell Dow v Norton [1996] RPC 76. The only issue in these two cases was whether the description of a substance in the earlier patent amounted to an enabling disclosure: in Asahi it did not; in Merrell Dow it did. A clear explanation of what prior written art must contain in order to invalidate a later patent was given by Lord Hoffmann in Synthon v Smithkline Beecham [2006] RPC 323. Quoting from Lord Westbury in Hills v Evans (1862) 31 LJ Ch 457 he stated that:

...the antecedent statement must be such that a person of ordinary knowledge of the subject would at once perceive, understand and be able practically to apply the discovery without the necessity for making further experiments and gaining further information before the information can be made useful. If something remains to be ascertained which is necessary for the useful application of the discovery, that affords sufficient room for another valid patent.

Documentary prior art may also include sales leaflets (Monsanto (Brignac’s) Application [1971] RPC 153); books and magazines as long as they could have been read by a member of the public (Lang v Gisbourne (1862) 31 Beav 133); and information in a library as long as the public have access to it. A private research library may not be accessible by the public, so that documents stored there do not amount to prior art: Re Tecalemit [1967] FSR 387, Re Bakelite [1967] FSR 582.

Prior use of a later claimed invention may be by the patentee, as in Gore v Kimal [1988] RPC 137 where samples of PTFE tape were supplied to customers before the filing date of the patent (the case should be treated with caution today as there was no enabling disclosure, it being impossible to determine from the samples how the tape had been made). Equally, the use of the invention may be by an innocent third party (as in Fomento v Mentmore [1956] RPC 87) or by a competitor (as in Bristol-Myers Co (Johnson’s) Application [1975] RPC 127). Under the 1977 Act, the issue is whether the skilled addressee, had they been present when the information was made public, could have implemented the invention.

The leading case (and one which you should study carefully) is Lux Traffic Controls v Pike Signals [1993] RPC 107. Traffic lights containing a new infra-red detector were tested in a public place. It was held that even though there was no evidence that anyone had examined the inside of the device, had the skilled addressee been present at the trial, it would have been possible for such a person to deduce from their observations how

This clear statement by Aldous LJ is worth memorising.


the device worked. By contrast, in Pall v Bedford Hydraulics [1990] FSR 329 microporous filters were supplied for testing which were incapable of analysis and so there was no enabling disclosure. Similarly, if a device is demonstrated in public, if this contains enough information to carry out the later invention, novelty will have been destroyed (Windsurfing International Inc v Tabur Marine [1985] RPC 59, Wheatley’s Application [1985] RPC 91) but not if those present were not able to observe how the device worked (Quantel v Spaceward Microsystems [1990] RPC 83).

But what if the disclosure occurs not in a public place but on private premises where members of the public (albeit unskilled people) were present and could examine the device if they wished? In Folding Attic Stairs Ltd v The Loft Stairs Company Ltd [2009] FSR 887, Peter Prescott QC thought that it was the place of disclosure which mattered, so that there is a significant difference between public and private premises. He added that the visitors would not have appreciated what they had seen, but even if they had this disclosure would not have anticipated claim 1 of the patent which was for the manufacturing process.

16.3.3 AnticipationAnticipation is a technical term of patent law which you must understand. It means that the prior art matches exactly the subject matter (i.e. the claims) of the later patent so as to render it not new. Anticipation occurs where the prior art contains an enabling disclosure. Three interchangeable tests for what amounts to an enabling disclosure are to be found in General Tire v Firestone [1972] RPC 457 which is generally endorsed by modern cases as being a correct statement of the modern law on anticipation.

Activity 16.6Read the judgment of Sachs LJ in General Tire v Firestone at pp.484–86. Then write a concise summary of the tests which he proposes to determine whether prior art amounts to an anticipation of the claimed invention.

Whether the prior art points inevitably to the later patent is assessed through the eyes of the notional skilled addressee. The question is whether such a person would be able to ‘work the invention’ from the information disclosed without undue burden: Lux Traffic Controls v Pike Signals [1993] RPC 107. Although the House of Lords has endorsed General Tire on two occasions, it appears to have changed its mind (without explanation) as to which of the tests is to be preferred. In Merrell Dow v Norton [1996] RPC 76 Lord Hoffmann indicated that the infringement test was to be avoided, while in Synthon v Smithkline Beecham [2006] RPC 323 he stated that this was the test he favoured.

Activity 16.7Read the opinion of Lord Hoffmann in Merrell Dow v Norton. Why does he say that the patent for terfenadine was anticipated by the earlier patent but not by the clinical trials of the drug?


As noted above, if an individual item of prior art does not contain all the elements of the later claimed invention, then the invention is valid for novelty. The test of enabling disclosure is very precise, so that if the earlier information does not contain every single integer of the claim, then the invention is new. It is then necessary to consider separately and sequentially whether the invention meets the requirement of inventive step.

16.3.4 Novelty of purposeThe ability to obtain a patent for the first and second medical use of a pharmaceutical substance was explained above. The EPO has further extended this principle to novelty of purpose in non-medical fields: MOBIL III/Friction reducing additive [1990] EPOR 73 which concerned a new use for a substance previously used as a rust inhibitor. United Kingdom courts have reluctantly accepted the principle: Merrell Dow v Norton [1996] RPC 76, Bristol-Myers Squibb Company v Baker Norton Pharmaceuticals Inc [2001] RPC 1.


SummaryThe requirement of novelty set out in section 2 of the Patents Act entails a comparison between the claims of an invention and the prior art. The prior art is any information made available to the public anywhere in the world. Information disclosed in breach of confidence does not destroy novelty. Besides determining whether information has been made available, it is also necessary to decide whether that information contains an enabling disclosure, such that a skilled addressee is able to carry out the invention claimed without undue burden.

16.4 Inventive step

Essential reading ¢ Bainbridge, Chapter 12: ‘Requirements for Patentability’ pp.430−44.

¢ Bently and Sherman, Chapter 19: ‘Inventive Step’ pp.488−506.


¢ Norman, Chapter 5: ‘Patentability’ section 5.6.

¢ Patents Act section 3, EPC Article 56.

¢ Cases: Pozzoli SpA v BDMO SA [2007] FSR 872; Hallen v Brabantia [1991] RPC 195.

16.4.1 Inventive step: general principlesThe next positive requirement of patentability is that there must be an inventive step or, rather, the invention must not be obvious. The requirement is found in section 3 of the Patents Act 1977, derived from Article 56 of the EPC. Read section 3 now. Inventive step has to be considered after the issue of novelty and involves different issues. Something may be new but not inventive. Whereas novelty is a question of whether the inventive is quantitatively different from what has gone before, inventive step is concerned with whether it is qualitatively different. Inventiveness is a question of fact to be decided objectively and without hindsight. Thus in Lilly Icos Ltd v Pfizer Ltd [2002] EWCA Civ 1, the patent for VIAGRA was little more than a putting into practice the recommendations and suggestions already found in the prior art. It may be difficult to avoid hindsight where the patent relates to an everyday item and the inventive step is small (see for example SEB SA v De’Longhi SpA [2003] EWCA Civ 952, CA, which concerned deep fat fryers), but nevertheless, the court must ensure that hindsight is not used.

Many cases assert that the word ‘obvious’ requires no further explanation, but then proceed to offer synonyms, such as ‘very plain’, ‘so easy that any fool could do it’, ‘routine development work’ or ‘workshop adjustment’. In contrast, an inventive step requires ‘a flash of insight’ or an ‘intellectual jump’.

16.4.2 Inventive step: the test to be appliedFor many years, the test for inventive step was that established by Oliver LJ in Windsurfing International v Tabur Marine [1985] RPC 59 at 73. The test provided a structured approach for determining whether an invention is or is not obvious and had been approved by the House of Lords. However, the test has now been re-ordered by Jacob LJ in Pozzoli SpA v BDMO SA [2007] FSR 872.

Activity 16.8Read the judgment of. Jacob LJ in Pozzoli SpA v BDMO SA. What does he say is the test for whether an invention has inventive step?

16.4.3 The test is objective not subjectiveInventive step is a ‘jury question’ (that is, a question of fact) to be determined by the court objectively, using the yardstick of notional skilled addressee. Just as with novelty, the skilled addressee (discussed in Chapter 15) has a vital role to play. Inventive step


is determined without reference to the inventor. It doesn’t matter how the inventor achieved success, whether by accident, hard work, intuition or creativity: Allmanna Svenska Electriska A/B v Burntisland Shipping Co (1952) 69 RPC 63 at 70.

16.4.4 The meaning of ‘prior art’ for the purpose of inventive stepThe Pozzoli case requires the court to compare the prior art with the invention. A question which remains unresolved is whether the prior art is the same for inventiveness as it is for novelty. The approach of the EPO is to compare the invention with the nearest prior art. United Kingdom cases have not been so clear. Initially, it was said that all prior art should be considered (Woven Plastic Products v British Ropes [1970] FSR 47). However, the later cases of Technograph v Mills & Rockley [1972] RPC 346 and General Tire v Firestone [1972] RPC 457 both held that the concept of the ‘diligent researcher’ should be used, so that the invention was to be compared with items of prior art which such a person would discover. Most recently, it has been said that ‘obscure’ prior art should be ignored (Beloit Technologies v Valmet Paper Machinery [1995] RPC 705, [1997] RPC 489). In Windsurfing itself (the forerunner of Pozzoli), the Court of Appeal held that all prior art should be considered.

16.4.5 The prior art: ‘mosaicing’In contrast to novelty, where each item of prior art has to be considered in isolation, in inventive step it is possible to combine different items of prior art when arguing that an invention is obvious. This process is called ‘mosaicing’. Despite this colourful language, it is unusual for a court to hold that separate, unrelated pieces of prior art can be combined when attacking a patent under section 3, because it has to be shown that the skilled reader would think it obvious to mosaic (remember, the skilled addressee has no inventive capacity). One example of where the court upheld the argument that the skilled addressee would combine separate items of prior art is Dow Chemicals (Mildner’s) Patent [1975] RPC 165. A recent case which discussed the matter is SEB SA v De’Longhi SpA [2003] EWCA Civ 952, CA.

A related issue is where an invention is said to consist of a combination of existing technology. The very act of putting together two or more known features may in itself involve an inventive step, especially where the skilled addressee has only basic skills and qualifications in the relevant field and has a technical prejudice against changing accepted technology. However, there will only be a ‘collocation’ (as it is known) if the invention, considered as a whole, consists of a single inventive concept where the combination of known elements produces a synergy. If each element performs its own function independently of the other, then there is not one invention but two, and each part must be considered on its own in light of the prior art: Sabaf SpA v MFI Furniture Centres Ltd [2005] RPC 209, applying the guidelines of the EPO and the earlier United Kingdom case of British Celanese Ltd v Courtaulds Ltd (1935) 52 RPC 171. An example of a combination of known elements, which is not inventive (because it does not amount to a collocation), is the putting together of a mincing machine and a filling machine to produce a sausage-making machine.

16.4.6 Secondary issuesSometimes subsidiary arguments are raised by a patentee to support the contention that a patent possesses an inventive step. These secondary issues, attractive as they are, are peripheral to the objective assessment via the Windsurfing test: Beloit Technologies v Valmet Paper Machinery [1995] RPC 705, [1997] RPC 489. The first of these arguments concerns the length of time taken to develop the invention (‘why hasn’t someone done this before?’). Thus in Re Beecham’s (Amoxycillin) Application [1980] RPC 261 the fact that it took six years to develop the next generation of antibiotics (in a highly competitive field) convinced the court that the patent possessed an inventive step. By contrast, in Genentech Inc’s Patent [1989] RPC 147 the Court of Appeal was not convinced that the time taken to develop a treatment for an illness by means of genetic engineering demonstrated inventiveness: it was simply a question of throwing time and money at the problem.


The subsidiary argument, which can be advanced by the patentee to demonstrate inventiveness, is that the patent has proved to be highly successful (Rotocrop v Genbourne [1982] FSR 241). Commercial success, however, may be attributable to other factors, such as fashion (Wildey v Freeman (1931) 48 RPC 405) or a successful advertising campaign (Haskell Golf Ball Co v Hutchinson (1906) 23 RPC 301). However, if something is inventive, it is not a counter-argument to say that it is simple: Haberman v Jackel International Ltd [1999] FSR 683.

SummaryInventive step (to be determined subsequently to and separately from the issue of novelty) requires the court to decide objectively, and without hindsight, whether an invention is not obvious. The structured approach of the Pozzoli test is used. This requires a comparison between the invention and the prior art once the court has identified the skilled addressee and his/her common general knowledge and has determined the inventive concept.

16.5 Capable of industrial application

Essential reading ¢ Bainbridge, Chapter 12: ‘Requirements for Patentability’, pp.444−45.

¢ Bently and Sherman, Chapter 17: ‘Patentable Subject Matter’, pp.392−95.

¢ Cornish, Chapter 5: ‘Validity’, para 5-53.

¢ Norman, Chapter 5: ‘Patentability’ section 5.7.

¢ Patents Act section 4 and EPC Article 57.

The last positive element of patentability (found in section 4 of the Patents Act, derived from Article 57 of the EPC) is that the invention must be capable of industrial application. Read section 4(1) and Article 57 now. The requirement can be equated with the phrase ‘any manner of new manufacture within the Statute of Monopolies’ found in section 101 of the Patents Act 1949. Under previous legislation, case law originally held that there had to be the production, improvement or preservation of a ‘vendible product’ (GEC’s Application (1943) 60 RPC 1). The meaning of ‘vendible product’ was gradually expanded until it meant that the invention had to produce some economic advantage, that is have a useful effect: NRDC’s Application [1961] RPC 134. Under the 1977 Act, it has been held that section 4 simply requires that the invention must not be something which is useless for any known purpose: in other words, the issue is whether the subject matter of the patent is ‘useful’: Chiron v Organon (No 12) [1996] FSR 153.

Examples of patent applications which have been rejected under section 4(1) include Re Duckett’s Patent Application [2005] EWHC 3140 where the alleged invention concerned an engine which went against the accepted laws of physics and Blacklight Power Inc v Comptroller General of Patents [2009] RPC 173 where the invention involved a plasma reactor based on an allegedly new species of hydrogen.

The requirement that an invention must be useful was considered by the Court of Appeal in Eli Lilly and Company v Human Genome Sciences Inc [2010] EWCA Civ 33. The patent in this case was declared invalid for being speculative. It concerned a particular protein which had been identified using ‘bioinformatics’. Jacob LJ made use of the skilled addressee when dealing with the issues. The specification suggested an astonishing range of diseases and conditions which could be treated by the claimed protein: the skilled reader would consider it totally far-fetched that the substance could be used in all of them and ‘would be driven to the conclusion that the authors had no clear idea what the activities of the protein were and so included every possibility’.



u explain the grounds on which an invention may be denied patent protection, and discuss the underlying public policy behind each of the exclusions from and exceptions to patentability

u explain the requirement of novelty in patent law and apply the judicial tests for lack of novelty in problem questions

u explain what is meant by the requirement of inventive step, and apply the test established in case law in problem questions

u explain what is meant by the requirement that an invention must be capable of industrial application

u list the criteria for patentability.

Sample examination questionsQuestion 1 Genchem plc is a United Kingdom company involved in biochemistry and genetic engineering. In 1996, it discovered the existence of a new substance: moron tribromide. Having created an artificial version of the substance in the laboratory, Genchem applied for and was granted a patent in respect of moron tribromide. It was assumed at first that the benefits of the substance were limited to the treatment of high blood pressure in humans. In December 2006, by accident, Genchem discovered that, if the substance was added to foodstuff given to sheep, it led to a genetic modification of their sweat glands, which resulted in their wool becoming repellent to insects. This provided the solution to the long-standing problem of producing moth-proof wool. Genchem accordingly applied for a second patent, which bore the filing date of 2 February 2007. The description of the invention stated that between 100 and 200 grammes of moron tribromide should be added to every kilo of foodstuff one month before shearing in order to produce the desired result.

The following items of prior art have now come to light.

a. A thesis by Boris, a Russian scientist, written in 1987, describing the means of modifying the sweat glands of mink so as to improve the quality of their fur. This thesis was kept in the library of the Moscow Academy of Sciences, which until 1991 was open only to scientists working for the government of the then USSR.

b. An Australian patent application, dated 2 January 2006, describing a method of injecting sheep with a related substance, moron dibromide, so as to modify their wool to produce a ‘self-shearing’ fleece.

c. A research paper written in June 2003 by a British university lecturer, Fred Ramsden, discussing the use of genetic engineering to modify the sweat glands of farm animals to make the animals less susceptible to parasites. This paper was submitted at the end of June 2003 to the members of the Animal Research Council with a view to obtaining research funding.

Advise Genchem as to the patentability of moron tribromide to produce moth-proof wool.

Question 2 Kenneth is an electronics engineer and the managing director of Red Eye Ltd, a company specialising in the manufacture of electronic surveillance equipment. In his spare time he is an enthusiastic if incompetent golfer. Kenneth has been anxious to improve the standard of his golf for some time, but every time he consulted the coach at his golf club, the only advice he was given was ‘keep your head still’. Kenneth tried various commercially available devices which purported to help the golfer maintain a consistent head position, such as a neck brace and a weighted hat. Dissatisfied with the results, he decided to find an alternative device which would have the desired result.


After various experiments conducted in his office after hours, Kenneth came up with a simple electronic device which is to be attached to the shaft of a golf club just above its head. The device consists of a small black box containing a battery-powered light emitting diode (which is a tiny, flashing red light). Provided the golfer keeps his or her head still, the constant stream of flashes can be seen as the golf club is swung back prior to the shot. If, however, the golfer’s head moves, the flashing light can no longer be seen. Kenneth tried out his device on several occasions in the summer of 2007 when he played golf with his friend Bill, who was sworn to secrecy.

Claim 1 of the patent which Kenneth filed on 26 February 2008 states:

‘A device for training the golfer to keep his/her head still, said device consisting of a small box clamped to the shaft of any golf club adjacent to its head and containing a battery-powered light-emitting diode (LED), so positioned that when switched on the stream of tiny flashes coming from the LED can be seen by the golfer if the head is kept still, but not if the head is moved out of place.’

The following pieces of information have now come to light.

i. For many years University lecturers and others giving presentations have used a battery-operated laser pointer so as to draw attention to information displayed on a white board or similar.

ii. From 1990, soldiers in the Russian army have been issued with rifles which point a tiny high-powered laser, thus enabling the user to know whether the weapon is aimed accurately.

iii. Since 1995, the Yukon Camera Company Inc has sold cameras which have a flashing green LED in the view-finder indicating to the photographer that the camera is correctly focused.

Advise Kenneth whether his device is patentable.

Advice on answering the questionsQuestion 1 What is required is a systematic application of sections 1 to 4 of the Patents Act 1977, prefaced by a discussion of who might be the skilled addressee of the Genchem patent. The skilled addressee here is likely to have a postgraduate degree in biotechnology, and would possess the mind-set and prejudices of those working in that industry, as well as the appropriate common general knowledge.

Dealing first with excluded subject matter, was the identification of the unexpected properties of moron tribromide a ‘discovery’ or was there a practical application (Chiron)? Was the patent claiming a method of treatment (which is excluded from patentability under section 4A(1)) or was it claiming the substance used in that treatment (section 4A(2))? If so, the fact that the substance had been used before as a medicine meant that Genchem would have to rely on the provision for second medical use in Section 4A(4). There was also a point as to whether the patent fell within section 1(3) Patents Act because it was contrary to morality (harming animals), which requires a discussion of EPO case law on this topic. Also, was the invention within Schedule A2 Patents Act because it was claiming an animal variety? Probably not.

Having considered any ‘internal’ objections to the patent, a good answer will go on to compare the invention with the prior art (identified in paragraphs (a), (b) and (c) of the question) to decide, in sequence, whether it was a new and possessed inventive step (candidates are reminded that these are separate issues and should not be run together). Novelty requires consideration of whether the information in question has been ‘made available to the public’, that is, as explained by the House of Lords in Synthon v Smithkline (2006), whether there has been disclosure and enablement. The Russian thesis and Australian patent had each been disclosed before the date of the second invention, but what about Fred Ramsden’s paper? Might the last mentioned be subject to confidentiality? Assuming that each of these three pieces of information had been disclosed and so amounted to prior art, did they anticipate Genchem’s invention? What is crucial here is the application of the test of anticipation from


General Tire (i.e. to see if the prior art would enable the skilled addressee to carry out Genchem’s invention without undue burden). On balance, none of the three items would enable the skilled addressee to utilise moron tribromide to produce moth-proof wool because none contained the exact information. Having concluded that the invention is new, it is still necessary to see next if it is inventive (it is vital to apply novelty and inventive step sequentially), applying the Pozzoli test to each of the three items of prior art. What should be asked is whether the skilled addressee, armed with the prior art, would think it ‘worthwhile to try’ to produce moth-proof wool using moron tribromide (Hallen v Brabantia). Could the skilled addressee progress from the prior art to the invention as a matter of course or would it require a ‘flash of insight’?

Question 2 Again, what is required is a systematic application of sections 1 to 4 of the Patents Act 1977, prefaced by a discussion of who might be the skilled addressee of K’s patent. As the invention appears not to be objectionable under any of the exclusions from and exceptions to patentability, the good answer should compare the claim with all the prior art. This is not just the information identified in paragraphs (i), (ii) and (iii), but also K’s experiments in his office after hours (did anyone see him and, if so, were they bound by confidentiality) and his games of golf with Bill. Bill might have been sworn to secrecy but the golf course is a public place. Did anyone else see what K was doing? Had the skilled addressee been present, could they have worked out how K’s device worked (Lux v Pike)? Therefore, for each piece of prior art it is necessary to decide, in sequence, whether the invention is new and possesses inventive step (these are separate issues and should not be run together).

Novelty requires consideration of whether the information in question has been ‘made available to the public’, that is, as explained by the House of Lords in Synthon v Smithkline (2006), whether there has been disclosure and enablement. Assuming that each of these pieces of information had been disclosed and was prior art, did it anticipate K’s invention? A good candidate will apply the test of anticipation from General Tire to see if the prior art would enable the skilled addressee to carry out what was claimed in K’s invention without undue burden or whether, if performed today, any of the prior art would infringe (see Lord Hoffmann in Synthon).

Although the prior art identified in paragraphs (i), (ii) and (iii) might not enable the skilled addressee to utilise a flashing LED attached to the head of a golf club because none contained the exact information in the claim, the tests of the device on the golf course might well destroy novelty. Even if it is concluded that the invention might not be new, it is still necessary to see next if it is inventive. Again, the good answer will apply the test set out in Pozzoli to all the items of prior art. What should be asked is whether the skilled addressee, armed with the prior art, would think it ‘worthwhile to try’ to produce the LED on the golf-club (Hallen v Brabantia)? Could the skilled addressee progress from the prior art to the invention as a matter of routine or would it require a ‘flash of insight’?


Reflect and review








Need to study again

I can explain the grounds on which an invention may be denied patent protection, and discuss the underlying public policy behind each of the exclusions from and exceptions to patentability..

¢

¢

¢

I can explain the requirement of novelty in patent law and apply the judicial tests for lack of novelty in problem questions..

¢

¢

¢

I can explain what is meant by the requirement of inventive step, and apply the test established in case law in problem questions..

¢

¢

¢

I can explain what is meant by the requirement that an invention must be capable of industrial application.

¢

¢

¢

I can list the criteria for patentability. ¢ ¢ ¢


Must revise

Revision done

16.1 The meaning of ‘an invention’ ¢ ¢

16.2 Excluded subject matter ¢ ¢

16.3 Novelty ¢ ¢

16.4 Inventive step ¢ ¢

16.5 Capable of industrial application ¢ ¢

Contents

Introduction 278

17 1 Whoisaninventor? 279

17 2 Ownershipofemployeeinventions 280

17 3 Compensationforemployeeinventions 282

17 4 Dealingsinpatents 284


17 Ownership of patents and employee inventions


Introduction

This brief chapter will deal with the ownership of inventions. In order to be able to apply the rules on ownership, it is first necessary to explore what we mean when we say someone is the inventor of a patent.

Having explained the criteria used by the courts to identify an inventor, we shall then look at the special rules concerning employee-inventors. This is a topic where intellectual property law, contract law and employment law overlap. Each has its different values. The Patents Act 1977 provides a particular solution to the ownership of employee-inventions which is coloured by employment rights thinking.

Once it has been decided who owns an invention − the employer or employee − the Act creates a scheme of compensation for employee-inventors. The details of the scheme will be considered and you should reflect on whether the legislation lives up to aspirations of the reformers.

Last, and by way of background information only, this chapter looks at the ways in which a patent owner can exploit the value of the invention by means of assignment and licensing. You should concentrate, however, on how the Patents Act deals with the rights of the employee-inventor.


u state the criterion which determines who is to be treated as the inventor of a patent

u state the rules which determine when an employer is treated as the owner of a patent

u summarise the rules on compensation for employee-inventors and evaluate the cases which have applied them

u identify whether an employee is or is not the owner of a patent.

Intellectual property 17 Ownership of patents and employee inventions page 279

17.1 Who is an inventor?

Essential reading ¢ Bainbridge, Chapter 13: ‘Ownership, Dealing with Patents, Safety and Security

and Crown Use’ pp.473−77.

¢ Bently and Sherman, Chapter 21: ‘Ownership’ pp.523−32.

¢ Cornish, Chapter 7: ‘Property Rights and Exploitation’ paras 7-01 to 7-02.

¢ Norman, Chapter 4: ‘Introduction to Patents’ section 4.5.1.

¢ Patents Act 1977 section 7.

¢ Cases: Staeng Ltd’s Application [1996] RPC 183; Re Viziball Ltd’s Application [1988] RPC 213.

Section 7 of the Patents Act 1977 deals with the question of who is an inventor. Read section 7 now. Observe how any person may apply for a patent, but it may only be granted to the inventor. The word ‘inventor’ is defined in section 7(3) as the ‘actual deviser’ of the invention. Pre-1977 law was not entirely clear whether the inventor was the person who had the bright idea or the person who put the idea into practical effect. Cases decided under section 7 have confirmed that the inventor is the person who thinks up the inventive concept underlying the patent: Staeng Ltd’s Application [1996] RPC 183, confirmed in Henry Brothers (Magherafelt) Ltd v Ministry of Defence [1999] RPC 442. The ‘inventive concept’ of a patent was explained in Chapter 15. To illustrate this, consider the facts in IDA Ltd v Southampton University [2006] RPC 567. Here, an article had appeared in The Times where one of the defendant’s professors had set out his ideas about how to build a better cockroach trap. He was then contacted by one of the claimant’s staff who in a confidential telephone call had suggested how to improve the invention by using magnetic powder. It was held that it was the claimant’s employee who had provided the inventive concept − the ‘bright idea’ − and so the claimant was entitled to the patent.

In passing, where there is a dispute as to entitlement, the United Kingdom Intellectual Property Office (UKIPO) has jurisdiction to resolve the matter (see sections 8, 9 and 37 of the Patents Act 1977). Previously, the Court of Appeal held that the jurisdiction to settle a dispute under section 37 depended on there having been either a breach of confidence (as in IDA Ltd v Southampton University [2006] RPC 567) or a breach of contract (as in Markem v Zipher [2005] RPC 761). In Yeda Research & Development Co Ltd v Rhone-Poulenc Rorer [2008] RPC 1 the House of Lords disagreed, stating that the only question is ‘who came up with the inventive concept?’ (either solely or jointly). Questions of entitlement and novelty were to be kept separate and both Markem and IDA were overruled with regard to the approach to entitlement disputes.

Under section 72(1)(b) of the Patents Act 1977, the grant of a patent to the wrong person is a ground of revocation but the ability to challenge for revocation on this ground is limited to co-inventors and has a strict time limit of two years from grant. The inventor is entitled to be mentioned in the patent even if s/he does not own it: section 13 of the Patents Act 1977.

Activity 17.1Read the cases of Staeng Ltd’s Application and Re Viziball Ltd’s Application listed above. What do the cases tell you about how the court determines who is the inventor of a patent?



17.2 Ownership of employee inventions

Essential reading ¢ Bainbridge Chapter 13: ‘Ownership, Dealing with Patents, Safety and Security


¢ Bently and Sherman Chapter 21: ‘Ownership’ pp.533−38.

¢ Cornish Chapter 7: ‘Property Rights and Exploitation’ paras 7-03 to 7-08.


¢ Cases: Electrolux v Hudson [1977] FSR 312; Re Harris’ Patent [1985] RPC 19; Greater Glasgow Health Board’s Application [1996] RPC 207; Staeng Ltd’s Application [1996] RPC 183; LIFFE Administration and Management v Pinkava [2007] RPC 667.

¢ Patents Act 1977 sections 39 and 42.

17.2.1 The pre-1977 law on ownership of employee inventionsThe law as it stood before the effective date of the Patents Act 1977 is explained here briefly so that you can appreciate the changes that the 1977 Act introduced.

Prior to the Patents Act 1977 there were no statutory rules on the ownership of inventions. The matter was governed entirely by a century or more of case law. The cases revealed that freedom of contract was the prevailing approach, and that the employer’s superior economic bargaining power was rarely questioned. In essence, the employer would own an invention made by an employee either by virtue of a provision in the contract of employment or because the employee was deemed to hold the invention on trust for the employer. Such a trust would arise by virtue of the employee’s fiduciary status or by virtue of his/her contractual duties.

With regard to the contractual solution, an employer had the economic power to insert a clause (called a ‘pre-assignment clause’) into the contract of employment stating that all inventions, whenever and wherever made, belonged to the employer. This practice was widely used but was eventually criticised for being in restraint of trade in Electrolux v Hudson [1977] FSR 312. Falconer J declared that a storekeeper who made improvements to a vacuum cleaner was beneficially entitled to the patent: it was not the employee’s job to invent and the clause in his contract requiring him to hand over all inventions was unenforceable.

The use of the trust to determine ownership of inventions occurred in one of two situations. The court could treat a senior employee as having the status of a fiduciary, so that s/he would then be held to be a trustee of the invention (as happened to the managing director in Worthington Pumping Engine Co v Moore (1903) 20 RPC 41 and the senior researcher in British Syphon Co. v Homewood [1956] 1 WLR 119). Alternatively, the court would examine the employment contract and conclude that as the employee was employed to invent, then s/he must be a trustee of the invention as the result of his/her duties: Triplex Safety Glass Co v Scorah [1938] Ch 211. It was, of course, open to the employer to draft the employment contract in such a way that the court could easily make such an inference.

The Patents Act 1949 conferred (in section 56) the power to resolve entitlement disputes. However, the restrictive interpretation accorded to the section by the House of Lords in Sterling Engineering v Patchett [1955] AC 534 at 543 meant that if by virtue of contract or trust the employer clearly owned the invention, then there was no dispute and the section could not be utilised.

SummaryThe pre-1977 law on employee inventions conferred enormous power on an employer to claim ownership of inventions made by employees, either through the mechanism of sweeping contractual provisions or by claiming that the employee was a trustee of any inventions. This economic power was only questioned once, in Electrolux v Hudson [1977] FSR 312.


17.2.2 The post-1977 law on ownership of employee inventionsAs a result of the deliberations of Banks Committee (the British Patent System) (1970) (Cmnd 4407) and the White Paper (Patent Law Reform) (1975) (Cmnd 6000), together with lobbying from trades unions, the Patents Act introduced a new regime for employee inventions. The effect of new legislation can be summarised thus.

u It introduced a new (comprehensive) statutory test of ownership which is to the exclusion of anything which applied before.

u It introduced a scheme of compensation for employee inventors.

u It rendered unenforceable certain terms in contracts of employment.

With regard to ownership of inventions, the key provision is section 39 of the Patents Act 1977. Read section 39 in full now. The following observations can be made.

u It displaces all the previous case law (observe the wording ‘notwithstanding anything in any rule of law’).

u The ‘default’ position is found in section 39(2): in all cases except those that fall within section 39(1), the invention belongs to the employee.

u The circumstances when the invention belongs to the employer under section 39(1) are precisely set out.

With regard to when an invention belongs to the employer, read again the provisions of section 39(1)(a) and (b). Under section 39(1)(a), observe how the section stresses:

u that the invention must be made in the course of the employee’s duties (either normal duties or those specifically assigned to him)

u the circumstances in either case were such that an invention might reasonably be expected to result from the performance of his duties.

This wording makes clear that the test is whether, as a result of the employee’s duties, s/he is expected to invent. Two cases provide useful illustrations of this. In Re Harris’ Patent [1985] RPC 19, Falconer J held that the patent belonged to the employee: as a salesman he was not expected to invent. In Greater Glasgow Health Board’s Application [1996] RPC 207, Jacob J held that a junior doctor was not expected to invent, even though part of his time was spent teaching and researching. Whether an employee is employed to invent is a matter requiring an examination of all the surrounding circumstances when the invention was made. Someone who was not originally employed to invent can become so as a result of promotion or changing conditions of employment: LIFFE Administration and Management v Pinkava [2007] RPC 667.

Under section 39(1)(b), observe how the invention will belong to the employer where the inventor made it in the course of his/her employment duties if, when the invention was made, the nature of his/her responsibilities indicates that s/he is under a special obligation to further the interests of the employer’s undertaking. It is not entirely clear whether this provision enacts the thinking in Worthington v Moore and British Syphon v Homewood. The only decision on the provision to date is Staeng Ltd’s Application [1996] RPC 183 which was considered above in relation to the identification of the inventor. It suggests, however, that the sub-section is concerned with those employees who are company directors or equivalent and shows how the court will consider all the circumstances of the employment relationship, including remuneration arrangements.

Last, in relation to section 39, you should also read section 42. Read this section in full now. Note how it renders unenforceable any contractual provision which purports to diminish the employee’s rights.


Activity 17.2Reread section 39 of the Patents Act 1977. Then read the decisions in Re Harris’ Patent, Greater Glasgow Health Board’s Application and Staeng Ltd’s Application. Then consider who would be entitled to own the patent which results from each of the following scenarios.

a. A trainee solicitor who invents a drink which helps him to overcome tiredness and headaches induced by his long working hours.

b. A university lecturer (who teaches in the School of Sociology) who invents a new shampoo for treating head lice in children.

c. A hairdresser’s assistant who discovers a new way of making hair conditioner from plant extracts while away on holiday in an exotic location.

d. A sales director who invents a new method of dispersing washing powder in a washing machine by placing tablets of detergent in a mesh bag.

17.3 Compensation for employee inventions



¢ Bently and Sherman, Chapter 23: ‘Patent Exploitation’ pp.584−89.



¢ Patents Act 1977 sections 40 and 41.

¢ Cases: British Steel plc’s Patent [1992] RPC 117; GEC Avionics Ltd’s Patent [1992] RPC 107; Memco Med Ltd’s Patent [1992] RPC 403; Kelly & Chiu v GE Healthcare Ltd [2009] RPC 363.

The Patents Act 1977 provides for two separate instances when an employee may be awarded compensation in respect of a successful patent of which they are the inventor but not the owner. The conditions imposed by the statute on the award of compensation are extremely restrictive and there is only one reported instance of an employee’s claim being successful. The two circumstances are as follows.

17.3.1 Compensation where the employer owns the patentSection 40(1) (as amended by the Patents Act 2004) deals with where the patent is owned by the employer as the result of the operation of section 39(1). The cumulative conditions which must be satisfied are that:

u there must be an invention made by the employee which belongs to the employer

u a patent for that invention has been granted

u the patent, the invention, or both, must be of outstanding benefit to the employer

u it is just that compensation should be awarded.

The second criterion is the most problematic. It requires that a patent must have been granted. This means that if a patent application is unsuccessful (for whatever reason) or if the patent is revoked before it becomes successful or if the employer decides not to file a patent application, then compensation cannot be claimed.

Also, a restrictive interpretation has so far been accorded to the requirement of outstanding benefit under section 40(1). In British Steel plc’s Patent [1992] RPC 117, it was held that there was no outstanding benefit where the savings in production costs, although totalling several hundred thousand pounds, amounted to 0.01 per cent of turnover. This would suggest that the requirement of ‘outstanding benefit’ is harder to establish in the case of an employer with a large multi-million pound


business than where the employer runs a small enterprise. Note also the wording of the section requires the benefit to the employer to be the result of the patent. There might be many other reasons why the employer’s business is successful, for example the employer might acquire a lucrative contract in which the patent plays only a very small part (GEC Avionics Ltd’s Patent [1992] RPC 107) or the company’s success might be the result of a cordial relationship with a long-term customer (Memco Med Ltd’s Patent [1992] RPC 403). However, outstanding benefit does not have to be proved over a lengthy period of business dealings: Entertainment UK Ltd’s Patent [2002] RPC 291. However, compensation was awarded in Kelly & Chiu v GE Healthcare Ltd [2009] RPC 363 where the claimants were awarded £1 million and £500,000 respectively, representing 2 per cent and 1 per cent of the value of patents worth £50 million for a radioactive imaging agent, the key compound of which had been synthesised by the claimants.

17.3.2 Compensation where the employee owned the patentThe alternative compensation scheme provided by section 40(2) contemplates that the invention once belonged to the employee (because of the operation of section 39(2)) but no longer does so because the employee has since assigned the invention to the employer or an associated company. The relevant criteria are that:

u a patent must have been granted for an invention made and owned by the employee

u s/he has since assigned it or granted an exclusive licence over it to the employer

u the benefit from this is inadequate in relation to that derived by the employer

u it is just that additional compensation be awarded.

Again, these are cumulative requirements. Their precise nature means that compensation may not always be available, for example if the invention is not patented (see above for why this might be so) or if the employee grants a non-exclusive licence to the employer rather than assigning the patent or licensing it exclusively. Consider also how the word ‘inadequate’ raises similar issues to its counterpart in section 40(1), ‘outstanding benefit’.

The factors to be taken into account when calculating compensation under both section 40(1) and section 40(2) are to be found in section 41. Read section 41 now. Given the narrow interpretation accorded to employee inventors under section 40, how effective do you think the provision is likely to be? What is a ‘fair share of the benefit’?

Activity 17.3 Read sections 39–42 of the Patents Act 1977 and then consider what rights to compensation an employee might have in the following situations.

a. The employer refuses to apply for a patent to cover the invention as the costs are too high.

b. The employer points out that there is a collective agreement covering all such inventions which stipulates the precise level of compensation, which works out to be £2.50 in the present case.

c. There is a term in all employees’ contracts of employment stating that all inventions made during normal working hours belong to the employer, with no obligation to compensate the relevant employees.

d. The employer closes down his company and sets up a completely separate company to which he sells existing patent rights at an undervalued figure; meanwhile the employee has been made redundant.

e. The patented invention wins a prestigious prize for innovation, but profits from its manufacture and sale are very low.


17.4 Dealings in patents



¢ Bently and Sherman, Chapter 23: ‘Patent Exploitation’ pp.570−84.


¢ Norman, Chapter 17: ‘Dealings in Intellectual Property Rights’ sections 17.3.1 and 17.6.

Lastly, and by way of background information only, we consider the property aspects of patents. You will find that all of the textbooks deal with this in far more detail than is necessary for your course. You should concentrate on the following basic features of patent ownership.

u Patents are classified as personal property (section 30) and can be dealt with in the same way as other forms of personal property, provided that the transaction is in writing. All transactions affecting patents should be entered on the Register of patents (section 32). A patent can be licensed to others. Such a licence can be exclusive or non-exclusive. An exclusive licensee has procedural rights conferred upon them by section 67, but if the licence has not been recorded on the register, then under section 68 the licensee will not be awarded any costs in any subsequent infringement action.

u A patent may be the subject of a compulsory licence three years after the date of grant (section 48). The reason why the patentee can be forced to license the invention is failure to exploit it.

u Alternatively, the patentee can ask that the entry on the Register be endorsed to the effect that licences of right are available (section 46), thus inviting others to request a licence, the terms of which may be decided by UKIPO.

u The Crown has extensive powers to exploit patents (section 55).

u Patent licences must comply with the requirements of United Kingdom and EU competition law. United Kingdom competition law is to be found in the Competition Act 1998, which introduced EU competition law principles into domestic law. EU competition law is a product of the case law of the ECJ and of the EU Commission in interpreting and applying Article 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (formerly Articles 81 and 82 EC). In relation to patent licences, these are subject to the provisions of Commission Regulation (EC) No 772/2004 of 27 April 2004 (the Technology Transfer Block Exemption). The Regulation exempts various types of intellectual property licences from Article 101 TFEU (which prohibits restrictive agreements) provided that such licences do not contain any prohibited clauses.


u state the criterion which determines who is to be treated as the inventor of a patent

u state the rules which determine when an employer is treated as the owner of a patent

u summarise the rules on compensation for employee-inventors and evaluate the cases which have applied them

u identify whether an employee is or is not the owner of a patent.


Sample examination question‘In relation to employee inventions, the scope of an employee’s duties is critical.’

Discuss.


u explain the structure of section 39 Patents Act 1977

u in particular, highlight the differences between section 39(1)(a) and (b)

u use decided cases to illustrate the criteria contained in section 39(1)(a)

u contrast these decisions with those cases decided under section 39(1)(b) where the employee’s position is more important in deciding whether s/he owes a duty to further the interests of the employer’s business

u conclude by indicating the nature of the culture change effected by the 1977 Act.


Reflect and review








Need to study again

I can state the criterion which determines who is to be treated as the inventor of a patent.

¢ ¢ ¢

I can state the rules which determine when an employer is treated as the owner of a patent.

¢ ¢ ¢

I can summarise the rules on compensation for employee-inventors and evaluate the cases which have applied them.

¢

¢

¢

I can identify whether an employee is or is not the owner of a patent.

¢ ¢ ¢


Must revise

Revision done

17.1 Who is an inventor? ¢ ¢

17.2 Ownership of employee inventions ¢ ¢

17.3 Compensation for employee inventions ¢ ¢

17.4 Dealings in patents ¢ ¢

Contents

Introduction 288

18 1 Overviewofpatentinfringement 289


18 3 Defencestoinfringement 292

18 4 Revocation 294

18 5 Interpretationofpatentclaims 295


18 Patent infringement and defences


Introduction

This chapter deals with the rights conferred on a patentee to stop others exploiting the invention. As with other forms of intellectual property, the statutory list of prohibited conduct is divided into direct and indirect infringement. Statute also provides a list of defences which may provide a defendant with protection in specific circumstances.

As you should by now appreciate, when an infringement action is based on a registered intellectual property right, the best tactic for any defendant is to challenge the validity of that right. If a patent has been granted in error, it will be revoked, thereby disposing of any liability for infringement. We shall therefore look at the grounds for revocation listed in the Patents Act 1977.

In order to succeed in a patent infringement action, the patentee will have to show that what has been produced by the defendant falls within the wording of the claims of the patent. The defendant will rarely have committed what is called ‘literal infringement’. The task of the court is therefore to construe the claims purposively and then decide whether the alleged infringement is within the meaning of the claims. This is an area which has generated a considerable amount of case law, and it is upon this that you should concentrate.


u explain and apply the statutory provisions which list the types of conduct which can infringe a patent

u explain and apply the principal defences to an action for patent infringement

u explain the grounds on which a patent may be revoked

u discuss critically the approach of United Kingdom courts to patent claim interpretation

u list the issues which are likely to arise in a patent infringement action.

Intellectual property 18 Patent infringement and defences page 289

18.1 Overview of patent infringement

A claimant who brings a patent infringement action has to establish two matters. First, that one or more of the acts of infringement set out in section 60 of the Patents Act 1977 has been committed and that such conduct falls within the scope of protection afforded to the patent. The scope of protection requires the court to construe the claims of the patent purposively, and then to compare the alleged infringing product or process with the claim(s) to see if it falls within the patentee’s monopoly (you should refer to Dyson Appliances Ltd v Hoover Ltd [2001] RPC 473, studied in Chapter 15, for an example of this). These two issues are sometimes called ‘infringement in law’ and ‘infringement in fact’. Once the claimant has established their case, the court will normally find in their favour unless one or more of the counter-arguments raised by the defendant succeeds. If you are unsure about the role of the claims in a patent specification, you should revisit your notes for Chapter 15.

The defendant to a patent infringement action has several possible counter-arguments.

u First, that there was no infringing conduct and/or that this did not fall within the scope of protection given to the patentee, in other words, the claimant has failed to establish the key ingredients of the infringement action.

u Next, even if all the ingredients of the infringement action have been proved, that one or more of the statutory defences apply to exonerate the defendant from liability. Such defences include private and domestic use, experimental use and exhaustion of rights. Whether one or more of these defences is applicable will depend primarily on the facts of the individual case.

u Last, the patent should be revoked under one or more of the grounds of revocation set out in section 72 of the Patents Act 1977. A successful counterclaim for revocation is a complete answer to any action for patent infringement.

SummaryThe statutory tort of patent infringement enables the patent to prevent others from committing certain types of conduct, provided that the defendant’s product or process falls within the scope of protection accorded to the patentee. The scope of protection is determined by purposive construction of the claims. A defendant can deny that infringement in law and infringement in fact has been established by the patentee. A defendant may also rely on one or more of the statutory defences to infringement or may seek to have the patent revoked on one or more of the statutory grounds.

18.2 Categories of infringing acts

Essential reading ¢ Bainbridge, Chapter 14: ‘Patents – Infringement, Remedies and Criminal

Offences’ pp.492−500.

¢ Bently and Sherman, Chapter 22: ‘Infringement’ pp.539−53 and Chapter 47: ‘Litigation’ pp.1074−076.

¢ Cornish, Chapter 6: ‘Scope of Monopoly’ paras 6-09 to 6-22.

¢ Norman, Chapter 6: ‘Infringement of Patents’ sections 6.1 and 6.2.

¢ Tamglass Ltd Oy v Luoyang North Glass Technology Co Ltd [2006] FSR 608.

Prior to the Patents Act 1977, there was no statutory definition of infringement. Instead, the courts relied on the actual wording of the document granting the patent as an indication of the patentee’s rights. It has always been the case that patent infringement requires some sort of commercial activity (British United Shoe Machinery Co v Simon Collier (1910) 27 RPC 567; SKF v Douglas [1991] FSR 522). Further, intention is


irrelevant to the imposition of liability (Proctor v Bennis (1887) 4 RPC 333). However, innocence, objectively defined, may affect the remedy awarded (Patents Act 1977 section 62(1)).

Sections 60(1) and (2) of the Patents Act 1977 set out the statutory definition of infringement, the former dealing with direct infringement; the latter with indirect, or contributory, infringement. As Cornish observes, the list of infringing acts can be reclassified, time-wise, into what happens before, during and after manufacture.

18.2.1 Direct infringementRead section 60(1) now. The following observations can be made.

u It requires that the infringing conduct be done without the patentee’s consent and within the United Kingdom (Menashe Business Mercantile Ltd v William Hill Organisation Ltd [2003] RPC 575).

u It requires that the infringing conduct be done while the patent is in force: this means that the annual renewal fees must have been paid.

u It lists the infringing conduct in respect of product and process patents. Whether a patent relates to a product (a thing) or a process (how to make something or do something or use something) depends on the wording of the claims. As explained in Chapter 15, a patent may have all product claims, or all process claims or a mixture of both.

u In relation to process patents, knowledge is required, but only as regards the offering for use of the process, not using the process. The knowledge required under section 60(1)(b) is that use of the process which has been offered to another would infringe. This suggests that the defendant has to have information about the patent in order to know that use of the process will infringe. The test is objective, because of the words ‘obvious to a reasonable person in the circumstances’. By analogy to similar wording in section 22 CDPA 1988, the defendant’s conduct is likely to be compared with that of the reasonable trader in that area of commerce: LA Gear v Hi-Tech Sports [1992] FSR 121. The inference must be that companies which seek patent protection for their own inventions or who exploit patents as part of their business are expected to familiarise themselves with patented inventions in their line of business by conducting regular searches of the United Kingdom patent database: Tamglass Ltd Oy v Luoyang North Glass Technology Co Ltd [2006] FSR 608. Ignorance of the claimant’s patent is unlikely to provide an excuse in such circumstances.

The fact that knowledge is only required for offering a process rather than using it is made clearer by the wording of what is now Article 7 of the draft EU Patent Regulation 2009 (formerly Article 25 of the Community Patent Convention, on which section 60 is based). This reads as follows:

The EU patent shall confer on its proprietor the right to prevent all third parties not having his consent:

a. from making, offering, putting on the market or using a product which is the subject matter of the patent, or importing or stocking the product for these purposes;

b. from using a process which is the subject matter of the patent or, when the third party knows, or it is obvious in the circumstances, that the use of the process is prohibited without the consent of the proprietor of the patent, from offering the process for use in the territories of the contracting states;

c. from offering, putting on the market or using a product obtained directly by a process which is the subject matter of the patent, or importing or stocking the product for these purposes.


Key words and phrases in section 60(1)

Some of the key words and phrases in section 60(1) require further explanation from case law. ‘Making’ and ‘importing’ are straightforward. ‘Disposes’ includes the purchase of an infringing product with the intention of exporting it (United Telephone Co v Sharples (1885) 2 RPC 28). You should not assume that the word ‘offers’ bears its contract law meaning, as it has been held to include both display of an infringing product at an exhibition (Dunlop Tyre Co v British & Colonial Motor Co (1901) 18 RPC 313) and advertising goods in a catalogue (Gerber Garment Technology v Lectra Systems [1995] RPC 383 at 411–412). ‘Uses’ requires something more active than simply possessing unassembled equipment (British United Shoe Machinery Co v Simon Collier (1910) 27 RPC 567). However, there is also liability for ‘keeping’ (introduced into United Kingdom law in 1977). ‘Keeping’ should be understood in the sense of ‘stocking’ something preparatory for sale (note the wording in Article 7 of the draft EU Patent Regulation above). Hence it does not impose liability on a person who is merely a warehouse keeper or carrier: SKF v Harbottle [1980] RPC 363. Rather, it indicates possession with intention to trade in order to make a profit: Hoffmann-La Roche v Harris [1977] FSR 200. Last, the word ‘directly’ was accorded a narrow interpretation in Pioneer Electronics Capital Inc v Warner Music Manufacturing Europe GmbH [1997] RPC 757, CA, namely, the court should ask whether the end product retained the essential characteristics of the patented process.

18.2.2 Indirect infringementConduct which amounts to indirect infringement is set out in section 60(2), which is subject to the specific defence in section 60(3). Read these two subsections now. The following observations can be made.

u The conduct in question (which must be in the United Kingdom) involves supplying or offering to supply something tangible.

u That ‘something tangible’ is an essential element of the invention.

u The result of the infringing act is that it puts the invention into effect (i.e. makes it work).

u The provision requires knowledge (objectively defined) on the part of the defendant. This is not knowledge of the patent, rather it is knowledge that what has been supplied will make the invention work.

u There is no liability if the thing supplied is a staple commercial product, that is, something which is readily available from a number of different sources of supply. ‘Staple commercial product’ should be contrasted with something that is made by the defendant to the primary infringer’s order.

18.2.3 Other types of infringing conductIt may be possible for a patentee to sue for infringement in cases which fall outside the exact wording of section 60(1) and (2). The most important is where the defendant is a joint tortfeasor, either because they induced the infringing act or because they were party to a common design. This may be useful where a primary infringer is located outside the United Kingdom, but a company based within the jurisdiction arranges for them to make the infringing product. However, the mere supply of infringing goods to a United Kingdom purchaser is not enough for this type of liability. ‘Each person must make the infringing acts his own’: Sabaf SpA v Meneghetti [2003] RPC 264 (CA) at para 58.

One practical point is that a claimant cannot sue for infringement until the patent has been formally granted. However, it is possible to back-date any claim for damages to the date when the patent application was published in the Patents Journal, subject to certain conditions, so that infringement committed between publication and grant is actionable: Patents Act section 69. If you are unsure about the steps in obtaining patent protection, you should reread your notes from Chapter 15.

The scope of section 60(2) was examined by the Court of Appeal in Menashe Business Mercantile Ltd v William Hill Organisation Ltd [2003] RPC 575. You may find it helpful to read this case.


Activity 18.1Read Tamglass Ltd Oy v Luoyang North Glass Technology Co Ltd [2006] FSR 608 for an illustration of how a defendant can commit a number of restricted acts under section 60(1). Then undertake the following exercise.

Supermed plc holds a United Kingdom patent for cuprocillin, a new type of antibiotic which is highly effective in treating bacterial infections. Cuprocillin has two ingredients, copper sulphate (a chemical known for many years and which is readily available) and moron tribromide, which is a relatively new compound and difficult to make. Supermed has discovered that Moulds Ltd have made the identical drug without permission and has then supplied the drug to Pharmagen Ltd, a wholesaler. Pharmagen has in turn supplied both Blacks, a chain of chemists’ shops, and Barsetshire Hospital. Moulds Ltd has obtained its supplies of copper sulphate from Tom and its supplies of moron tribromide from Harry.

Explain which infringing acts listed in sections 60(1) and 60(2) of the Patents Act 1977 have been committed and by whom (you may assume that all the claims in the cuprocillin patent are product claims). Would your answer be different if Moulds Ltd arranged for cuprocillin to be manufactured by Pasteur SA, a French company, at a factory in France?


u explain and apply the statutory provisions which list the types of conduct which can infringe a patent.

18.3 Defences to infringement

Essential reading ¢ Bainbridge, Chapter 15: ‘Patents – Defences, Groundless Threats and Revocation’

pp.525−31.



¢ Norman, Chapter 6: ‘Infringement of Patents’ section 6.3.

¢ Cases: Lubrizol Corp v Esso Petroleum Ltd [1998] RPC 727; United Wire Ltd v Screen Repair Services (Scotland) Ltd [2000] 4 All ER 353.

There are a number of defences which may be raised against a claim of patent infringement. For convenience, they are organised here into separate groups.

18.3.1 Defences derived from EU patent lawSection 60(5) of the Patents Act 1977 contains a number of specific defences which are primarily derived either from what is now Article 7 of the draft EU Patent Regulation (formerly Article 27 Community Patent Convention) or from the wording of the Directive on the legal protection of biotechnological inventions (the Biotech Directive, discussed in Chapter 16). The common denominator of these provisions is that they are concerned with striking a fair balance between the interests of the patentee and the legitimate business interests of third parties. Read section 60(5) now. Observe how most of the defences involve quite specific factual circumstances, such as the activities of a pharmacist (section 60(5)(c)) and the defences on farmers’ privilege (inserted as a result of the Biotech Directive) which will apply only in the context of patents involving living matter (section 60(5)(g) and (h)). Another group of defences which will only arise in a particular factual scenario relates to vehicles, ships and aircraft temporarily within United Kingdom territorial waters or airspace (section 60(5)(d), (e) and (f)). In Stena Rederi Aktiebolag v Irish Ferries Ltd [2003] RPC 681, in the context of a ferry travelling regularly between Eire and the United


Kingdom, the Court of Appeal clarified what is meant by ‘temporarily’. Quite simply it means ‘for a limited period of time’. The frequency, persistency and regularity of the visits were irrelevant.

The remaining two defences in the subsection relate, first, to using the invention for private not commercial purposes. SKF v Evans [1989] FSR 513 explained that ‘private’ meant ‘personal’ rather than ‘secret’. Second, there is the defence of experimental purposes. The old case of Frearson v Loe (1878) 9 Ch. D. 48 stated the policy that ‘patent rights were never granted to prevent persons of ingenuity exercising their talents in a fair way’. Like the private use defence, there is the requirement that the conduct must not be done for some overriding commercial purpose. Thus to conduct experiments with a view to challenging the validity of a patent would fall within the defence, but conducting trials of a product with a view to obtaining government approval for its subsequent sale would not: Monsanto v Stauffer Chemical [1985] RPC 515. As pointed out in SKF v Evans, the wording of section 60(5)(b) requires the experiments to be done for purposes ‘relating to the subject matter of the invention’. Such subject matter is determined by the wording of the claims. In SKF v Evans itself, this meant that experiments carried out on goods which were the subject-matter of one patent with a view to challenging a separate but related patent were not protected by this defence. Similarly, in Corevalve Inc v Edwards Lifesciences AG [2009] FSR 367, the defendant’s device for an artificial heart valve was different from the claimant’s. Applying Monsanto v Stauffer the court concluded that if, as here, the defendant had mixed purposes (developing confidence in its product by the professionals who would use it, building up technical data through the use of its device in hospitals and generating revenue) it was necessary to determine what was the preponderant purpose. It could not be said that data gathering was the predominant purpose so, had the defendant’s device infringed, the experimental use defence would not have been available.

18.3.2 Prior useAs with other forms of registered intellectual property right, a defendant can always argue ‘I was here first’. The prior use defence is set out in section 64 of the Patents Act 1977. Read the section carefully now. You should note the very precise criteria in the section, in particular, that the relevant conduct must have been started by the defendant before the priority date of the patent. This means that the defendant’s conduct must pre-date the filing date of the claimant’s patent, not its date of grant. The section was accorded a narrow interpretation by the Court of Appeal in Lubrizol Corp v Esso Petroleum Ltd [1998] RPC 727.

Activity 18.2Read the Court of Appeal decision in Lubrizol Corp v Esso Petroleum. Explain why the defendant in that case was unable to rely on the defence in section 64.


18.3.3 Case lawCase law has provided three further defences to patent infringement. Under the jurisprudence of the ECJ, the exhaustion of rights doctrine developed under Article 34 of the Treaty on the Functioning of the European Union (TFEU) (formerly Article 28 EC) can be relied upon by a defendant who has imported a patented product which has been placed on the market with the patentee’s consent in another EEA Contracting State: Cases 15 and 16/74 Centrafarm v Sterling Drug [1974] ECR 1147. If you are unclear on the doctrine of exhaustion of rights, please refer to your notes from Chapter 13 (‘Trade mark infringement and defences’).

Another so-called defence, first recognised in Sirdar v Wallington (1907) 24 RPC 539, is that the purchaser of a patented product has an implied licence to repair it, as long as the repair does not amount to the manufacture of a total replacement. The ‘defence’ has been examined by the House of Lords in United Wire Ltd v Screen Repair Services (Scotland) Ltd [2000] 4 All ER 353. It was pointed out that this was not a true defence to infringement. Rather, it is a way of saying that the defendant has not actually infringed the patent, as the act of repair does not appear in the list of infringing acts in section 60.


Another so-called ‘defence’ (sometimes known as the ‘squeeze’ argument) is to say that the infringement is ‘not novel’. It comes from the decision in Gillette Safety Razor Co v Anglo-American Trading Co (1913) 30 RPC 465 (hence it is often referred to as the ‘Gillette defence’). It involves the defendant arguing that the alleged infringement (which is not quite identical to the patent) is within the prior art. Its effect is to place the patentee ‘on the horns of a dilemma’ (to quote Lord Moulton in that case). If the patentee argues that the patent claims should be widely interpreted (so that the alleged infringement falls within their scope) the patent will be invalid because of anticipation or obviousness. If, on the other hand, a narrow construction of the patent is adopted, so that the patent survives any attack on its validity, the defendant’s product or process will fall outside its wording and not infringe. As was explained by Lord Evershed in Page v Brent Toy Products (1950) 67 RPC 4, the Gillette ‘defence’ is not really a defence. Rather, it is a method of pleading, enabling the defendant to raise non-infringement and validity in the same argument. You should return to the Gillette defence once you have completed your reading of section 18.5, ‘Interpretation of patent claims’, below.

18.3.4 Restrictions on the availability of damagesSection 62 of the Patents Act 1977 limits the availability of damages in certain circumstances. The most important is when the defendant argues that the infringement was innocent. Innocence is to be determined objectively: Wilbec v Dawes [1966] RPC 513.

SummaryA defendant to a patent infringement action, besides denying that the claimant has established the ingredients of the action, has a number of statutory and case law defences. The most important statutory defences are to be found in section 60(5) and section 64 of the Patents Act. Section 60(5) aims to strike a balance between the needs of competitors and the interests of the patentee, whereas section 64 contains the defence of prior use. The statutory defences all contain precise wording and will only apply in very specific situations.


u explain and apply the principal defences to an action for patent infringement.

18.4 Revocation

Essential reading ¢ Bainbridge, Chapter 15: ‘Patents – Defences, Groundless Threats and Revocation’

pp.536−39.

¢ Bently and Sherman, Chapter 22: ‘Infringement’ p.569.



¢ H Lundbeck A/S v Generics (UK) Ltd [2009] RPC 407 (HL).

Section 74 of the Patents Act 1977 lists the circumstances when the validity of the patent may be put in issue. The most important one in this list from your point of view is an action for patent infringement. Any person can apply to revoke a patent − there is no need for the applicant for revocation to show that they have standing to sue: Cairnstores Ltd v AB Hassle [2002] FSR 95. The grounds for revocation are set out in section 72. This is a self-contained provision which excludes any consideration of the previous law: Genentech Inc’s Patent [1989] RPC 147, Mentor v Hollister [1991] FSR 557.

Read section 72(1) now. Of the five grounds of revocation listed there, the ones on which you should concentrate are those in paragraph (a) (not a patentable invention) and paragraph (c) (insufficiency). Paragraph (a) means failure to comply with any of


the requirements of patentability will invalidate the patent. You cannot therefore study patent infringement without also knowing thoroughly the requirements for patentability. These were explained in Chapter 16.

Activity 18.3List the requirements for a patentable invention found in section 1 of the Patents Act 1977.


The requirement of sufficiency was explained in Chapter 15. You should be aware that a challenge under section 72(1)(c) can involve two different allegations. First, that the description of the invention in the patent specification does not enable the skilled addressee to perform the invention (sometimes called ‘classic insufficiency’). Section 72(1)(c) also covers what is sometimes referred to as ‘Biogen insufficiency’ (so called after the decision of the House of Lords in Biogen v Medeva [1997] RPC 1). This means that the claims of the patent are broader than the description. The matter was explained by Aldous LJ in Kirin Amgen Inc and others v Hoechst Marion Roussel Ltd and others [2003] RPC 31, at para 71 in the following terms.

The specification must enable the invention to be performed] to the full extent of the monopoly claimed. If the invention discloses a principle capable of general application, the claims may be in correspondingly general terms. The patentee need not show that he has proved its application in every individual instance. On the other hand, if the claims include a number of discrete methods or products, the patentee must enable the invention to be performed in respect of each of them.

The matter has since been considered by the House of Lords in H Lundbeck A/S v Generics (UK) Ltd [2009] RPC 407. You should read carefully what Lord Neuberger says about the significance of Biogen v Medeva and the fact that the latter was a highly unusual case. In essence, the ability to revoke a patent for overly broad claims depends on whether the claims match the description.

SummarySection 72 of the Patents Act 1977 contains an exhaustive list of the grounds on which a patent may be revoked. Revocation may be the subject of separate proceedings before the Patent Office or can be raised by way of a counterclaim to infringement proceedings. The grounds of revocation are, in essence, that there is not a patentable invention, that the patent has been granted to the wrong party, that the description of the invention is insufficient or that there has been an impermissible broadening of the description or claims of the patent when it was amended. The grounds of revocation most frequently encountered are that what was granted was not a patentable invention and/or that the specification was insufficient.


u explain the grounds on which a patent may be revoked.

18.5 Interpretation of patent claims

Essential reading ¢ Bainbridge, Chapter 14: ‘Patents – Infringement, Remedies and Criminal

Offences’ pp.500−10.





¢ Cases: Catnic Components v Hill & Smith [1982] RPC 185; Improver v Remington [1990] FSR 181; Daily v Berchet [1992] FSR 533; Wheatley (Davina) v Drillsafe Ltd [2001] RPC 133; Kirin Amgen Inc and others v Hoechst Marion Roussel Ltd and others [2005] 1 All ER 667.

18.5.1 Claim interpretation: the issuesIn determining whether there has been patent infringement, it is necessary to decide whether the defendant’s conduct falls within the scope of the claimant’s patent. Such an issue requires the court to interpret the claims in the patent specification, a notoriously subjective activity. Traditionally, United Kingdom courts adopted a ‘literal’ interpretation: ‘what is not claimed is disclaimed’ (EMI v Lissen (1939) 56 RPC 23 at 39 – Lord Russell). The literal approach was not followed if this produced an absurd result and deprived the patentee of all protection (Henrickson v Tallon [1965] RPC 434). The literal approach treated the claims as marking the absolute extent of the patentee’s monopoly (a ‘fence post’), so that anything outside the scope of the claims did not count as infringement. You may find it helpful to think of the claims in a patent specification as analogous to a map of real property for the purposes of land registration. Patent infringement then becomes a question of whether the defendant has ‘trespassed’ on the patentee’s monopoly by entering the linguistic territory marked out by the claims.

18.5.2 Claim interpretation: taking the substance of the inventionA defendant will rarely commit ‘textual’ or ‘literal’ infringement. Instead, s/he will have made changes to the claimant’s invention. Whether these differences (called ‘variants’) infringed used to be determined by what was known as the ‘pith and marrow doctrine’ or the doctrine of ‘mechanical equivalents’. In order to infringe the defendant must have taken the ‘pith and marrow’ of the invention by incorporating all the essential integers in the alleged infringement (an ‘integer’ is a key feature of a claim). If such integers, being the ‘substance’ of the invention, were present, it didn’t matter if other, non-essential, integers had ‘mechanical equivalents’ substituted for them: Marconi v British Radio Telegraph & Telephone Co (1911) 28 RPC 181, Birmingham Sound Reproductions v Collaro [1956] RPC 232. The difficulty was to decide what was the substance of any given invention. As examples of older cases (these are no longer of precedential value, although each is a majority decision of the House of Lords) we may note Van der Lely v Bamfords [1963] RPC 61 (a mechanical hay rake with ‘demountable’ hindmost wheels was not infringed by a rival product with ‘demountable’ front wheels) and Rodi & Wienenberger v Showell [1969] RPC 367 (an expandable watch-strap with ‘U’ shaped links was not infringed by one with ‘C’ shaped links). In both of these cases the alleged infringement worked in exactly the same way as the claimed invention.

18.5.3 Claim interpretation: purposive constructionLiberalisation appeared to have arrived when Lord Diplock in Catnic Components v Hill & Smith [1982] RPC 185 argued that a ‘purposive construction’ of the patent specification should be adopted. He stated that the court should ask whether persons experienced in the kind of work in which the patent was intended to be used (i.e. the skilled addressee) would understand that the patentee intended strict compliance with the words appearing in the claim. In this case it was decided, in relation to a patent for a lintel which stipulated that the back-plate of the lintel had to be ‘vertical’, that the claims would cover lintels, the back-plate of which was not at a precise right-angle. A literal interpretation, confining the patent to those with right-angled back-plates, would have deprived the patentee of all protection. ‘Vertical’ here was treated as a descriptive word rather than one having an exact meaning. According to Codex v Racal-Milgo [1983] RPC 369, Lord Diplock’s ‘purposive construction’ test replaced the ‘pith and marrow’ doctrine which should now be regarded as of historical interest only.


18.5.4 The effect of the Protocol to Article 69 EPC 1973 and the 2000 amendmentsThe 1977 Act is supposed to have introduced a changed approach to claim interpretation. Section 125 of the Patents Act 1977 incorporates Article 69 of the European Patent Convention (EPC) on the extent of protection to be conferred on a patent. Read section 125 and Article 69 EPC now.

Article 69 EPC declares that the scope of protection accorded to a patent is to be determined by the claims which are to be interpreted in the light of the description and any drawings. The original wording of the Protocol to Article 69 EPC directed national courts to avoid applying a strict literal interpretation of the claims and equally to avoid using the claims simply as guidelines. A middle path was to be adopted, ‘combining fair protection for the patentee with a reasonable degree of certainty for third parties’.

The 2000 amendments to the EPC included a revision to the Protocol to Article 69. The amended Protocol consists of two Articles. Article 1 reproduces the current version of the wording, except that ‘patentee’ is replaced by ‘patent proprietor’. Article 2 is new: it provides that: ‘For the purpose of determining the scope of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.’

It is important that you remember the wording of Article 69 and the amended wording of the Protocol.

18.5.6 Case law on the ProtocolThe adoption of the Protocol has been discussed in an extensive body of United Kingdom case law. You should make every effort to read the principal cases. The historical development of the cases can be summarised as follows.

u The Court of Appeal in the interlocutory proceedings in Improver v Remington [1989] RPC 69 declared that Lord Diplock’s purposive construction test in Catnic was the appropriate test for patents granted under the 1977 Act (even though the Catnic litigation involved a patent granted under the 1949 Patents Act).

u In the substantive hearing in Improver v Remington [1990] FSR 181, Hoffmann J took Lord Diplock’s question from Catnic and reworked it into a more complex three-stage test, the final question asking whether the skilled reader, confronted with the specification, would understand that the patentee intended strict compliance with the wording of the claim.

u Thereafter, United Kingdom courts applied what became known as the Catnic/Improver questions to determine whether a variant infringed. An example is Daily v Berchet [1992] FSR 533 where it was held that a baby walker with a ‘braking arrangement in association with the rear wheels’ was not infringed by a similar walking frame where braking was achieved by means of friction with the ground. The approach of the Court of Appeal in this case repays close study: the court takes the claim and breaks it down into essential integers (in the same manner as the old ‘pith and marrow’ doctrine), thereby emphasising the literal meaning of the claim. Other cases where the Catnic/Improver questions were used include Electrolux v Black & Decker [1996] FSR 595 and American Home Products Corp v Novartis Pharmaceuticals UK Ltd [2001] RPC 1.

u There is only one United Kingdom decision which has questioned the correctness of the Catnic/Improver questions, namely PLG Research Ltd v Ardon [1995] RPC 287 CA. Here, Millett LJ argued that it was preferable to follow the then approach of the German courts to claim interpretation. He states that these courts used a modified version of the Improver questions. The first two questions are identical (namely, as a question of fact, whether the variant works in the same way as the invention and, if so, whether this would have been obvious to the skilled addressee). However, the third question is replaced by an alternative which asks what variants the skilled reader would contemplate as falling within the claims.


u PLG v Ardon was immediately criticised (and Millett LJ’s remarks were stated to be obiter) by Aldous J in Assidoman Multipack v The Mead Corporation [1995] RPC 321. It was then repeatedly stated by the Court of Appeal (for example, in Beloit v Valmet [1997] RPC 489 and Kastner v Rizla [1995] RPC 585) that reliance on the Improver questions was the proper approach under the EPC to determine patent claim interpretation.

u The Improver questions were renamed ‘the Protocol questions’ in Wheatley (Davina) v Drillsafe Ltd [2001] RPC 133. There is an interesting division of opinion in the Court of Appeal as to whether or not there had been infringement.

u Not every case utilised the questions. For example, the court dispensed with the questions in Warheit v Olympia Tools Ltd [2003] FSR 95, where the invention was very simple and there was literal infringement. Equally, in cases dealing with pharmaceutical patents, it was said that the Protocol questions, though providing a structured approach, were not always appropriate and that the Protocol itself simply required the third question to be put: Pharmacia Corp v Merck & Co Inc [2002] RPC 775 (CA) and Merck & Co Inc v Generics (UK) Ltd [2004] RPC 607.

u Last, in Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667 (HL), the issue of claim interpretation was revisited in detail by Lord Hoffmann. He suggests that in fact there is only one question that must be asked: what would a person skilled in the art have understood the patentee to have used the language of the claim to mean? Everything else, including the Protocol questions themselves, was only guidance to a judge trying to answer that question. Further, in instances of new technology, the Protocol questions might be unhelpful.

u Cases since Kirin Amgen include Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd [2009] EWCA Civ 1062 where Jacob LJ sets out a summary of all the issues on claim interpretation. You will find the list of his points set out by Norman.

u Since Kirin Amgen, the 2000 revisions to the EPC have come into force, including the changes to the Protocol. It was pointed out earlier that Article 2 of the Protocol now states that equivalent elements are to be taken into account. You should consider carefully whether Lord Hoffmann’s statement in Kirin Amgen that there is no doctrine of equivalents accords with this.

u Following Kirin Amgen it is clear that the choice of the skilled addressee, as well as the context of the patent (i.e. how sophisticated it is) and the precision of language used by the patentee, can all have a crucial bearing on how claims are interpreted. Consider how the court approached key words in the following cases: Corus UK Ltd v Qual-Chem Ltd [2008] EWCA Civ 1177 (the word ‘tailored’ in a patent relating to the manufacture of steel did not have a precise meaning); Ancon Ltd v ACS Stainless Steel Fixings Ltd [2009] EWCA Civ 498 (the skilled addressee of a patent concerned with bolts used in fixing metal-framed buildings was not a geometer but a practical designer of such buildings); Boegli-Gravures SA v Darsail-ASP Ltd [2009] EWHC 2690 (Pat) (‘pyramidal teeth’ in a patent for a machine for embossing paper was used figuratively rather than precisely); Occlutech GmbH v Aga Medical Corporation [2009] EWHC 2013 (Ch) (the words ‘dumb-bell shaped’ in a patent for a surgical device were descriptive, while the word ‘clamp’ involved a degree of precision); and Zeno Corporation v BSM-Bionic Solutions Management [2009] EWHC 1829 (Pat) (the use of exact measurements for time and temperature in a device for treating insect bites indicated that the patentee expected precise compliance).

Activities 18.4–18.618.4 Read the opinion of Lord Diplock in Catnic Components v Hill & Smith. Then read

the judgment of Hoffmann J in Improver v Remington. How does each say the issue of patent claim interpretation is to be approached? What is the effect of Lord Hoffmann’s speech in Kirin Amgen?

18.5 Read the decision of the Court of Appeal in Wheatley v Drillsafe. What are the differences between the majority judgments (Sedley and Mance LJJ) and the minority judgment of Aldous LJ on the issues of infringement?


18.6 Read paragraphs 18 to 52 and 65 to 75 of the opinion of Lord Hoffmann in Kirin Amgen. What does he say about claim interpretation?

Useful further reading u Turner, J. ‘Purposive Construction: Seven Reasons why Catnic is Wrong’ [1999]

EIPR 531.

u Sherman, B. ‘Patent Claim Interpretation: the Impact of the Protocol on Interpretation’ (1991) 54 MLR 499.

u Norman, H. ‘Determining the Scope of the Patentee’s Monopoly: Purposive Construction Revisited’ [1998] Anglo-American LR 221.

u Fisher, M. ‘New Protocol, Same Old Story? Patent Claim Construction in 2007; Looking Back with a View to the Future’ [2008] IPQ 133.


u discuss critically the approach of United Kingdom courts to patent claim interpretation

u list the issues which are likely to arise in a patent infringement action.

Sample examination questionQuestion 1 Critically discuss the purposive approach to the construction of patent claims.

Question 2 Levron plc, which until a few years ago manufactured only shampoos, hair conditioners and hair spray, is the owner of a UK patent granted on 1 April 2000 for an improved type of heated roller. The description of the invention explains that the problem encountered previously with heated rollers was that they tended to have an adverse effect on the user’s hair. There was well-documented evidence that heated rollers had a drying effect on the hair such that excessive use resulted in the hair becoming damaged and brittle. The description goes on to say that the advance over the prior art lies in the fact that the Levron roller contains an inner chamber in which is stored a hair-conditioning gel. When the gel becomes heated along with the roller the gel softens and passes through tiny perforations in the roller to come into contact with the hair. Claim 1 of the specification accordingly reads:

‘A plastic hair roller comprising a round tube containing a substantially circular inner chamber in which can be stored hair-conditioning gel, the outer surface of said roller consisting of perforations each of 1 millimetre diameter such that when said roller is placed over the element of an electric heater until it is hot, the said gel becomes semi-liquid so that when hair is wrapped around the roller, the gel can pass from the inner chamber through the perforations and into contact with the user’s hair.’

Bella SA, a French company, has started to manufacture a rival product to the Levron heated roller at its factory on the outskirts of Paris. The Bella heated rollers have an elliptical profile and an oval internal chamber which utilises a hair conditioning liquid rather than a gel. In consequence the size of the perforations in the rollers is 0.75 millimetres diameter. Levron has discovered that Bella has agreed to supply 10,000 units to Largesse plc, a UK firm which runs a mail order catalogue. In addition, the Bella product is being advertised on Bella’s website which can be readily accessed from the UK.

Levron seeks your advice as to its chances of success in any infringement proceedings in the UK including any remedies to which it might be entitled. (You should assume that Levron has obtained patent protection only in the UK.)



u begin by explaining the role of patent claims in the law of patents, mentioning section 14(5) of the Patents Act 1977 as well as section 125 and Article 69 and the Protocol thereto in the EPC

u explain that claims have to be interpreted both for issues of validity and infringement, and that the same interpretation should apply in each context

u briefly explain the historical development of claim interpretation up to the decision in Catnic (but it should be emphasised that this account should be as concise as possible)

u set out Lord Diplock’s remarks in Catnic and explain how Hoffmann J reworked the Catnic question into the three Improver questions (again, this should be as brief as possible)

u evaluate whether Lord Diplock’s approach in Catnic was as radical as is often claimed and whether it met the objectives of the Protocol to Article 69 EPC 1973 (reference to some of the available literature is expected)

u similarly, consider whether Hoffmann J’s Improver questions fulfilled the Protocol’s objectives, in particular whether the third question carried the implicit danger of a return to literal interpretation which is outlawed by the Protocol

u discuss the outcome in Wheatley v Drillsafe and whether the ‘rebranding’ of the Improver questions to the ‘Protocol’ questions was significant

u discuss Lord Hoffmann’s opinion in Kirin Amgen, in particular his statement that there is no doctrine of equivalents

u consider some of the cases decided after Kirin Amgen

u conclude by explaining the changes to the wording of the Protocol found in EPC 2000 and debating whether they are likely to have any effect on the approach of United Kingdom courts to patent claim interpretation, especially with regard to the treatment of equivalent elements.

Question 2 A good answer will do the following.

u Consider, as a preliminary matter, the inventive concept, the skilled addressee of the patent and their common general knowledge (cf the technique adopted in Dyson v Hoover considered in Chapter 15). The inventive concept here might be the combination of hair conditioner with heated rollers to solve the problem of brittle hair. The skilled addressee is likely to be a graduate (Dyson), with a degree in biology and practical experience in the cosmetics industry. His/her common general knowledge would be information accepted without question by those working in the industry. The skilled addressee will be used by the court to determine issues of infringement and validity.

u Consider the wording of the claim (which is a product claim), observing that it does not contain highly technical language. Some language is general (‘substantially circular’), other language is more precise (e.g. the diameter of the perforations). How have recent cases treated such language?

u Identify who has committed the relevant acts of direct infringement under section 60(1)(a). Bella’s manufacture of the competing product will not be actionable as it occurs outside the United Kingdom, but the company’s website would amount to ‘offering to dispose of’ the product (see Gerber v Lectra discussed above concerning the meaning of the word ‘offer’ in section 60(1)). Largesse has imported, offered to dispose of (through its mail order catalogue) and disposed of the infringing product.

u Consider whether the above two potential defendants have any defences under the Patents Act or case law (note there would not be an exhaustion of rights defence as the alleged infringing product has not been put on the market by the patentee).


u Consider whether the patent is liable to revocation. The most likely objection under section 72 is that this is not a patentable invention. Although the patent appears not to fall within any of the categories of excluded subject matter and is capable of industrial application, it might be open to challenge on the ground that it is either not new or not inventive.

u Consider whether the alleged infringement falls within the scope of the patentee’s protection. The wording of the claim should be broken down into its essential integers, and these should then be compared with the infringement. The four variants which need discussion are the round roller versus the elliptical roller; the shape of the respective inner chambers; the use of a liquid in the Bella roller rather than a gel; and the size of the hole through which the hair conditioner has to pass. The Kirin Amgen question should be applied to each variant: what would a person skilled in the art have understood the patentee to have used the language of the claim to mean?

u Briefly discuss remedies should the action succeed. Damages would be calculated in accordance with the principles set out by Lord Wilberforce in the General Tyre case (see Chapter 4). Other remedies are as set out in section 61 of the Patents Act.


Reflect and review








Need to study again

I can explain and apply the statutory provisions which list the types of conduct which can infringe a patent.

¢

¢

¢

I can explain and apply the principal defences to an action for patent infringement.

¢ ¢ ¢

I can explain the grounds on which a patent may be revoked.

¢ ¢ ¢

I can discuss critically the approach of United Kingdom courts to patent claim interpretation.

¢ ¢ ¢

I can list the issues which are likely to arise in a patent infringement action.

¢ ¢ ¢


Must revise

Revision done

18.1 Overview of patent infringement ¢ ¢

18.2 Categories of infringing acts ¢ ¢

18.3 Defences to infringement ¢ ¢

18.4 Revocation ¢ ¢

18.5 Interpretation of patent claims ¢ ¢

Contents

Chapter2 305

Chapter3 307

Chapter4 308

Chapter5 310

Chapter6 311

Chapter7 313

Chapter8 315

Chapter9 316

Chapter10 317

Chapter11 317

Chapter12 318

Chapter13 320

Chapter14 322

Chapter15 323

Chapter16 324

Chapter17 326

Chapter18 326

Feedback to activities

Intellectual property Feedback to activities page 305

Chapter 2

Activity 2.1 No feedback provided.

Activity 2.2 From the information given, intellectual property protection is relevant to the following features of the kettle.

u The name, HOTTA, could be protected as a trade mark. The company has a choice whether to register the name under the provisions of the Trade Marks Act 1994, or to seek protection for the name under the tort of passing off. If the company elects for registration, it will need to consider whether, besides complying with the formal requirements of the Act, the trade mark might be rejected by the Trade Marks Registry under either the absolute or relative grounds of refusal (see further Chapter 12). If the company chooses to rely on the tort of passing off in order to prevent a competitor adopting a similar name, it will have to prove all the elements of the tort listed in Reckitt & Colman v Borden. For that reason, registration would seem to be the safer option.

u The shape of the kettle could be protected as a design. Again, the company has a choice whether to register the design under the Registered Designs Act 1949. It would have to demonstrate that the design was ‘new’ and had ‘individual character’. Alternatively, it could rely on the unregistered design right found in the Copyright, Designs and Patents Act, provided it could demonstrate that the design was ‘original’, ‘not commonplace’ and had been recorded in a design document. This form of protection has the advantage of being automatic, thereby avoiding the requirements of registration, but if it wishes to stop a competitor selling a similar-looking kettle, the company would have to show that its rival copied its design. As the kettle is unlikely to be treated as an artistic work in its own right, copyright protection would not be available.

u The use of the double wall and special gas in the manufacture of the kettle could be protected as a product patent, provided that the invention satisfies the requirements of patentability in the Patents Act 1977, that is, that the invention is new, has an inventive step and is capable of industrial application. The invention would have to be compared with the prior art to see if it met the requirements of novelty and inventive step.

u The instruction leaflet would qualify for protection as a copyright work (see Elanco v Mandops [1980] RPC 213).

u The list of suppliers could amount to confidential information. The company should consider entering confidentiality agreements with the suppliers themselves, and requiring its employees to sign confidentiality undertakings. However, this form of protection would only be available if the relevant information was not in the public domain.


Activity 2.4 Many theories have been advanced to justify the creation of intellectual property rights. The ones most frequently encountered are: the natural law theory (based on the writings of John Locke) which argues that a person is entitled to the fruits of their labour; utilitarian theory (based on the writings of Jeremy Bentham) which argues that limited monopolies lead to the greatest social good and the maximisation of net welfare; the theory of personality, which argues that what a person creates is an extension of their personality, so that ownership is in fulfilment of basic human needs; and social policy theory, where granting limited monopolies are part of social planning. Often these arguments are distilled further, so that intellectual property


rights are justified by saying that they provide an incentive to innovate or a reward for innovation, or that in the long term they improve the quality of life for those who use the tangible products, or else they add to the store of human knowledge. Each one of these theories can be challenged. To give two simple examples, the argument that individuals will not innovate if there is little or no intellectual property protection in case others ‘steal’ their ideas is not born out by the early developments in computer software which occurred in the absence of any legal protection; and Henry Ford refined the system of mass-producing motor cars long before the US Patent Office granted patents for ‘methods of doing business’.

Further, the natural law theory may appear logical when viewed in light of the social and political conditions when it was written, but Locke was writing in the context of an agrarian society when land was the principal commodity. Does the natural law theory translate into the twenty-first century? What should count as ‘labour’ in the context of intellectual property rights, when it is very easy to think up a brand name and when the threshold for copyright protection is so low? In the information society, what are the ‘commons’: facts, culture, ideas?

In the case of utilitarianism, the principal concern is how to achieve the appropriate balance between rewarding the individual and safeguarding the interests of society. There is the ever-present risk of the ‘reward’ creating monopoly power. Equally, with the theory of personality, there is the challenge of defining which resources should be deemed to belong to an individual and which should belong to the public. How much autonomy should an individual have? How much public property should they be able to monopolise? The social policy theory begs the question what sort of society do we want? Should it be based on consumer welfare, the artistic tradition or distributive justice?

Finally, is it correct to attempt to apply a particular theory to every single type of intellectual property right? Return to the descriptions of the various rights in section 2.1. Can copyright be supported by the same arguments as patents? Does the same reasoning apply to the protection of designs or trade secrets? The odd one out here is clearly the trade mark right. The reasons for having a trade mark law are much more to do with the workings of the consumer society rather than with rewarding creativity. However, the pro-competitive benefits of having brand names have to be balanced by the need to avoid anti-competitive behaviour by brand owners.

You may have found this question difficult to answer at this stage of your studies. Don’t worry. Come back to it when you have completed this subject guide, and reconsider the issues. You may come to a different conclusion. Also, when working your way through the various chapters on the individual types of intellectual property rights, keep at the back of your mind the justifications for having them. Consider whether the law lives up to its supposed aim.


Activity 2.6 At first glance the views of Lord Diplock and Lord Scarman cannot be reconciled (and ironically, Lord Scarman was one of the members of the House of Lords in the Erven Warnink case). Lord Diplock argues that the common law, through the tort of passing off, must develop and remain flexible to changing business practices and to offer new forms of redress. He comments that passing off is a ‘protean’ tort, that is, one that can change its shape to suit the needs of the case. Lord Scarman, on the other hand, argues that passing off should stay within its traditional boundaries. If the key elements of the action are not present, there can be no redress merely because it is felt intuitively that the defendant’s conduct was ‘unfair’. Hence in the present case, the defendants had not committed passing off by taking the theme of the claimant’s advertising campaign nor by copying the rather common colour scheme of the claimant’s product (green and yellow for cans of lemonade was not unusual). Such division of opinion is quite common in passing off (compare the views of Aldous LJ in Arsenal v Reed with those of


Jacob LJ in L’Oréal SA v Bellure NV about whether passing off should develop into a more general tort of unfair competition.

Despite the differences of attitude between the two Law Lords about the response of the common law to unfair trading, the two cases can be reconciled at a factual level. In the Pub Squash case, their Lordships were constrained by a finding of fact at first instance (by Powell J) that the defendant’s conduct had not caused any confusion. The facts as found did not even meet the requirements suggested by Lord Diplock in the Erven Warnink case (and you should note that Lord Diplock himself pointed out that just because all the elements of the tort were established did not guarantee redress for the claimant – though why that should be so he did not explain). By contrast, in Erven Warnink there was clear evidence of damage to the claimant’s business through lost sales once the defendant starting selling their imitation product.

Activity 2.7 It has been a matter of debate for some time whether there should be a recognised action under United Kingdom law to claim redress for the harm done by unfair competition. Several unsuccessful attempts have been made in recent years to introduce this by statute but the official Government response has always been that the law of passing off provides adequate redress (consider the accuracy of this assertion once you have studied Chapter 11 below). There is ample authority against the introduction of a general tort of unfair competition, for example the views of the judges in Victoria Park Racing v Taylor and Moorgate Tobacco v Philip Morris, and of Jacob LJ in L’Oréal SA v Bellure NV as well as the views of Lord Scarman in the Pub Squash case. On the other side of the line, Lord Diplock in Erven Warnink, Laddie J in Irvine v Talksport and Aldous LJ in Arsenal v Reed together with the ECJ in L’Oréal SA v Bellure NV all appear to suggest that the law should remain responsive to changing business practice and to protect the investment which businesses make in their intellectual property rights.

Whether, as debated in the articles by Spence, Libling, Ricketson and Carty, the doctrine of misappropriation as the basis of a new tort of unfair competition could be utilised is open to argument. It would be necessary to define what would be capable of protection and whether this subject matter should give rise to proprietary rights. If the basis of protection was the investment which a company had made in its intellectual property rights, would that not simply lead to monopoly power, so that the law would be protecting the large enterprise rather than the individual innovator? Where should the boundary be drawn between acceptable and unacceptable behaviour? What should the justification of such protection be? Why should competition not be encouraged? And, lastly, what is wrong with imitation?


Chapter 3


Activity 3.2 A good answer will identify the following differences.

u The origins and objectives of WIPO and the WTO.

u WIPO’s educational role, and its oversight and revision of the main international conventions.

u The presence of the WTO’s dispute settlement procedure as a means of requiring a Contracting State to change its domestic law.

u The criticisms which have been levelled at the WTO.


Activity 3.3A good answer will identify that:

u the EPC is a regional rather than a global treaty

u the EPC deals with patents, not any other form of intellectual property right

u the EPC deals with substantive patent rights, rather than simply laying down minimum standards

u the EPC established the EPO, an organisation with its own internal judicial organs, in Munich

u a patent application to the EPO results in the grant of national patent rights, rather than simply providing a procedural shortcut for making multiple applications to national patent offices.


Chapter 4


Activity 4.2 At first glance the views of Laddie J in Series 5 appear to contradict those of Lord Diplock in American Cyanamid. Students often ask the question ‘how is this possible’ in view of the fact that a decision of the House of Lords is binding on all lower courts. It is, however, instructive to compare in more detail what was said in the two cases. In American Cyanamid, Lord Diplock set out the criteria for the award of what is now called an interim injunction. These criteria can be summarised as follows.

u Is there a serious issue to be tried?

u Are damages an adequate remedy? That is, if the claimant succeeds at trial and obtains a permanent injunction, could it be compensated adequately if the defendant continues the conduct for which an injunction is sought between the date of the application and the date of the trial; if so, if the defendant were to succeed at trial, could it be compensated adequately if an injunction were granted between the date of the application and the date of the trial?

u Where does the balance of convenience lie?

u If factors are evenly balanced, is the status quo preserved?

u Which party has the stronger case?

If a similar exercise is conducted in respect of Laddie J’s judgment in Series 5, his restatement of the guiding principles is:

u interim relief is a matter of discretion always depending on the facts of the case

u the rule is that there are no rules – the relief must be kept flexible

u the court should avoid dealing with complex issues of disputed fact or law.

The major factors to be considered are the adequacy of damages, the balance of convenience, the maintenance of the status quo and whether there is any clear view of the relative strengths of the parties.

Looked at more closely, both judgments are saying the same thing. Interim injunctions are always a matter of discretion. Each case will depend on a number of factors. The conclusion to be drawn from both cases is that periodically the courts need to remind themselves of the discretionary nature of the award. Laddie J was doing no more than Lord Diplock had done 20 years before.


Activity 4.3 Search orders have always been of a draconian nature. Often misdescribed as a ‘civil search warrant’, the order is addressed to the defendant who it is thought might destroy vital evidence of infringing conduct. It requires him/her to admit the claimant’s solicitor to his/her premises with a view to copying or removing such evidence. The defendant is not given notice of the request for the order and hence is not in court when it is granted. Surprise is of the essence. At one time, such orders were granted relatively readily. By the late 1980s the perception was that they were being misused. Such misuse was either that claimants were using them as a ‘fishing expedition’ to gain information about a rival’s business or they were being administered in a very aggressive manner. This led Nicholls VC to restate the guidance principles in the Hibben decision. The criteria he established were:

u the order is to be executed during office hours so that the defendant can contact his/her solicitor

u a female solicitor must be present if female family members or office staff will be on the defendant’s premises

u the defendant must be given a list of items which are being removed

u the injunction restraining the defendant from giving a ‘tip off’ to third parties is to be limited in time

u the order must be executed only at company premises before a responsible officer of the defendant’s business

u the claimant is not allowed to make a thorough search of the defendant’s premises (that is, the order should not be a ‘fishing expedition’)

u there must be an experienced supervising solicitor who should report back to the court.

These are now part of the CPR. It may be observed that the guidelines are indicative of the sorts of abuse which occurred before the Hibben decision, which may well have justified the description of the order as a ‘nuclear weapon’. Further, the guidelines, when coupled with the requirement to give a cross-undertaking in damages and the fact that the claimant’s failure to disclose everything to the court when seeking the order may render any evidence gathered inadmissible, suggest that the opportunity for abuse is much reduced.



Activity 4.6 The basis of an account of profits is to give to the claimant what the defendant has gained from his/her infringing conduct, although the basis of damages is restorative. The calculation of damages for infringement of intellectual property rights is explained by Lord Wilberforce in the General Tire case. If claimant and defendant are not in direct competition as manufacturers, the normal measure of damages will be a reasonable licence fee.

The decision of Potton v Yorkclose is a good example of when an account will provide a more favourable outcome for the claimant. It was a case of copyright infringement where the copyright work consisted of architect’s plans for houses. Had the defendant sought a licence before building the houses, the fee would have been governed by the rules of the Royal Institute of British Architects and would have been relatively low. However, by copying without permission and by building houses at a time of a rising housing market, the defendant gained much more from its infringing activities. Despite the complexity of the calculation (see the case note by Bently referred to above), an account was a more effective remedy.


A claimant will therefore elect for an account of profits where the money made by the defendant from infringing conduct (for example, because each infringing copy has a very high resale value) far outweighs the licence fee which would normally be paid.

Activity 4.7 The threats action can be seen as a means of ensuring that the intellectual property owner does not attempt to stifle competition by excessive use of their monopoly power. Small competitors may be intimidated by a ‘letter before action’, particularly in view of the high costs of litigation. Accordingly, where an intellectual property owner makes an unjustified threat of litigation, they may become the defendant to a threats action. This has the effect of shifting the onus to the intellectual property owner to show that there had been infringing conduct and that the right in question is valid. The exception is that the owner can threaten to sue a manufacturer or importer of an infringing product. They cannot threaten to sue someone merely for selling infringing goods. The scope of protection of the threats action is very wide. For example, where a patentee (or their solicitor) writes to a third party threatening to sue them for supplying an allegedly infringing product to another, and the recipient then ceases supply of that product, the persons who can sue the patentee (or their solicitor) for making unjustified threats are not only the recipient of the letter but the other party to the contract of supply.

Chapter 5

Activity 5.1No feedback provided.

Activity 5.2 A good answer will do the following.

u Set out the facts of the two cases succinctly.

u As regards the Naomi Campbell case, summarise the five categories of information identified by the House of Lords as being potentially protectable (see para 88 of Lord Hope’s judgment) and explain which of these five categories were treated as confidential by the majority of the House of Lords and why.

u As regards the Douglas & Zeta-Jones decision, comment on the claimants’ use of confidentiality undertakings, and the views of the court on how photographic invasions of privacy (as opposed to the publication of factual information) are to receive special treatment. Just because a photograph has been published does not mean that another photograph (taken on the same occasion but without permission) can be published.

u Consider the two-fold impact of Von Hannover v Germany both with regard to the ‘horizontal effect’ of the ECHR (i.e. that the courts are obliged to ensure that the Article 8 right is protected against media intrusion) and with regard to the public interest defence.

u Evaluate subsequent cases, whether involving a pre-existing contractual relationship (McKennitt v Ash, HRH Prince of Wales v Associated Newspapers) or not (Murray v Express Newspapers, Mosley v News Group News).


Activity 5.4 Faccenda v Fowler states that information obtained by an employee in the course of their employment can be of three types, namely trade secrets, commercially sensitive information and the employee’s general skill and knowledge. On cessation of employment, the first is automatically protected, the second will require an


appropriate contractual provision (which may raise issues of restraint of trade) and the third category, for reasons of public policy, is non-protectable. In individual cases, it may not be easy to distinguish between the first and second categories.

Activity 5.5Lord Goff declares that the key issue is the conscience of the involuntary third party recipient, because conscience is the basis of the action for breach of confidence. Whether the recipient’s conscience is affected is an objective test. It therefore depends on whether the third party knew or should have known from the circumstances that the information which they were given was secret.

Activity 5.6 The defence of ‘in the public interest’, as established in Initial Services v Putterill, reflects the equitable nature of the action for breach of confidence. There can be no liability in disclosing something which does not deserve the protection of secrecy. A good example can be seen in the facts of Lion Laboratories v Evans. More problematic are the cases concerned with media intrusion. Here, following the introduction of the Human Rights Act, the courts have to balance the conflicting rights of respect for private life and freedom of expression enshrined in the ECHR. In the case of celebrities, as opposed to private citizens, do those in the public eye have to accept a diminution in their privacy? Although A v B (a Company) appeared to blur the distinction between ‘in the public interest’ and ‘of public interest’, the decision of the ECtHR in Von Hannover v Germany makes clear that it is the position held by the person which matters. Those holding political office should expect every aspects of their lives to be the subject of scrutiny, while in the case of those who do not hold political office, Article 8 ECHR prevails over Article 10 unless there has been hypocrisy or criminal conduct. Subsequent cases like McKennitt v Ash, HRH Prince of Wales v Associated Newspapers and Mosley v News Group Newspapers all confirm this approach.

Activity 5.7 The normal remedies for breach of confidence will be an injunction and some sort of compensatory award.

With regard to the award of an injunction, the conflict between the equitable maxim ‘equity does nothing in vain’ and the desire to punish the confidant, revealed by cases such a ‘Spycatcher’ should be explored. Lord Denning’s dissenting judgment in Schering v Falkman should be discussed as should the recent decision in Vestergaard Frandsen A/S v BestNet Europe Ltd.

In relation to the award of compensation, there is conflict in the case law as to the correct method of calculating damages. In some cases, where there was a contract between the parties, then the contractual measure of damages is deployed. Where the relationship is non-contractual, then the outcomes in Seager v Copydex and Dowson & Mason v Potter should be contrasted. In some instances (like the facts which occurred in A.G. v Blake), an account of profits is an alternative compensatory remedy.

Chapter 6


Activity 6.2 Viewed historically, copyright law in the eighteenth, nineteenth and twentieth-centuries has arguably always been reactive to technological change. Technology impacts in two ways: it can produce new forms of creativity (as examples, consider films, sound recordings and computer software) and it can produce new ways of reproducing existing works (as examples, consider the photocopier and the video recorder in the twentieth century, and the impact of digital technology in the twenty-first century).


By way of challenging the statement in the question, consider whether copyright law needs amending today to embrace new forms of creativity or whether the existing definitions of ‘works’ in section 1 of the CDPA are sufficiently flexible to cope. Likewise, is the current law adequate to deal with the effect of digital technology (reference should be made to the WIPO Treaties of 1996 and the EU’s Information Society Directive on this point)? Is the real difficulty not the scope of the substantive law, but the ability to enforce it against those who reproduce copyright works in the home?

Activity 6.3

The key features of copyright u It does not depend on registration but arises automatically upon the act of

creation. Thanks to international conventions, such protection is worldwide.

u It protects ‘works’.

u Such works must be original.

u Under United Kingdom law, the threshold of protection is low.

u It exists to prevent copying, so that independent creation is always a defence.

u Copyright infringement need not be committed in the course of trade, but if it is, then such conduct may give rise to criminal as well as civil liability.

u There is no liability for the use of a copyright article.

u Copyright is fragmentary in nature, conferring a ‘bundle’ of rights on the copyright owner.

u In most instances, copyright lasts for the author’s life plus 70 years. Once copyright expires, the work passes into public domain.

Activity 6.4 Laddie’s article suggests three ‘sacred principles’ which justify the existence of copyright protection: ‘thou shalt not steal’; natural law; and reward theory. Regarding these justifications, consider whether there a tension between natural law theory (as put forward in the old decision of Millar v Taylor) and the ‘sweat of the brow’ test of originality as currently used in United Kingdom copyright law? Laddie’s concerns about the over-expansion of copyright are:

u the three-dimensional protection for two-dimensional artistic works

u the award of exemplary damages

u the lengthy duration of copyright protthe ease of creation and the low test of originality under United Kingdom law

u the imposition of criminal liability

u the narrow nature of the United Kingdom defence of fair dealing.

Activity 6.5 Your answer should:

u set out concisely the facts of the two cases

u consider critically the decisions reached by the respective tribunals

u consider whether in fact there was a ‘work’ in Green, such that with appropriate evidence the claimant could have established that he had gone beyond a mere idea

u consider whether the information in Mandops was a work or whether it was an idea and, if so, whether by expressing it in a different form the defendants had in fact avoided liability for infringement (it may be observed that the effect of the decision was indirectly to extend the duration of protection for the claimant’s invention).

You should ensure that you have studied these two cases carefully, as we shall return to this issue in Chapter 8.


Chapter 7

Activities 7.1–7.6 No feedback provided.

Activity 7.7 Because the EU Database Directive created a two-tier system of protection for databases, one dependent on intellectual creativity and one dependent on substantial investment, it had been assumed that the sui generis right in Article 7 protected those databases compiled with ‘the sweat of the brow’. The ECJ’s ruling in the British Horseracing Board case should be compared with the judgment by Laddie J at first instance ([2001] RPC 612). The interpretation of Article 7 by the ECJ has the effect of severely limiting the number of databases which will obtain protection under the sui generis right to those where the effort of obtaining and verifying information is considerable. This is in contrast to the facts of the British Horseracing Board case itself where, although the claimant had invested a lot of money in maintaining its database of horseracing activity in the United Kingdom, it was largely the passive recipient of information supplied to it by others. The ruling of the ECJ has the effect of upholding the argument advanced by the defendant before Laddie J (but ultimately rejected by him) that what is protected under Article 7 is the quality of the database itself, not the value of the information contained in it. As a result, the requirement of substantial taking for the purposes of infringement reflects the effort in assembling the database, even though the restricted acts of extraction and utilisation receive a liberal interpretation by the Court.


Activity 7.9 This question is designed to test your understanding of the key elements of permanent form and originality as requirements of copyright protection.

a. The novel as it is being dictated would be spoken word literary copyright. Is an MP3 recording enough for fixation in view of section 178? If so, the recording would be both the fixation of the literary copyright under section 3(2) and a sound recording in its own right. The secretary cannot be the owner of the literary work copyright because of the requirement of originality. S/he is just an amanuensis and not the ‘creator’ of the work, unless, of course s/he provides enough editorial input to amount to joint authorship. In any event, the secretary may be an employee.

b. Here you need to distinguish the speech and the report of the speech. Pay particular attention to section 3(3) (discussed in the Phillips article): fixation need not be by the author, but until there is fixation there can be no copyright. Phillips also makes the observation that it is impossible to be both the ‘fixer’ of a copyright work and an infringer at the same time, because until a work is fixed it cannot be infringed. The presence or absence of prepared notes affects the reporter’s potential liability as an infringer (subject to section 30 – the defence of fair dealing in respect of reporting current events and section 58 as regards the reporting of spoken words – see Chapter 8). Whether the reporter (or his/her employer) obtains copyright in the report depends on how much originality the reporter added. Consider the cases of Walter v Lane and Express Newspapers v News (UK).

c. This raises the same issues as in the first part of the question. Does a dramatic work require writing or equivalent to be in permanent form or does the film suffice as fixation? Is this case distinguishable from Norowzian? Note the difficulties inherent in the case caused by the fact that (a) there was no copying of either the dramatic work or the film; (b) the Court of Appeal confused the dramatic work with its means of fixation, which was itself the subject of separate copyright. Besides the mime, there would be film copyright here, but note because of section 9 the two


copyrights might be owned by different people. There could also be performer’s rights as set out in Part II of the CDPA (although such rights are not on the syllabus).

d. There would be separate copyrights in the words and music. D would get copyright in the words. Concerning the music, is this a case of there being nothing to copy (because what is improvised is a mere idea) or is D’s deferred recording a fixation of B’s work under section 3(3) and section 178 or is this a case of joint authorship or could D claim copyright by analogy with Sawkins v Hyperion? What are the criteria for joint authorship? Can this be distinguished from Walter v Lane? How much skill, labour and judgment is there in writing down music? Could there also be a claim for breach of confidence?

e. The demo tape is sufficient to fix a musical work (Hadley v Kemp). It would also amount to a sound recording in its own right. E infringes music copyright but not that of the sound recording because there is no copying of the sounds (note the very precise wording of section 5A). What about B’s moral rights?

Activity 7.10 This question is designed to test your understanding of the ‘connecting factors’ which enable a non-United Kingdom national to claim the benefit of United Kingdom copyright.

This is a literary work copyright and so governed by the Berne Convention rules for qualification for protection under sections 153–160 CDPA.

a. In the case of an unpublished work, qualification is dependent on the status of the author at the time the work was made (note the statutory definition of ‘made’ in section 3(2) as regards literary, dramatic or musical works – sections 154(4) and (5) are generally unhelpful). A does not qualify by virtue of his nationality. Further information is required, that is, where does A reside or where is he domiciled?

b. In the case of a published work, qualification depends either on A’s status at the time of publication (remember the statutory definition of publication is in section 175(1) and that section 175(4) defines what is not publication) or on the place of first publication. As Ruritania is not a convention country, qualification will have to depend again on A’s status, so the same additional information is required as in the first part of the question.

c. As the CDPA extends to the Falkland Islands, you need to consider the possibility of simultaneous publication under section 155(3) if this occurs within 30 days of the publication in Ruritania.

d. If Ruritania joins the Berne Convention, this has a retrospective effect as regards protection in the United Kingdom (see Article 18).

Activity 7.11 As regards the distinction between ownership and authorship, CDPA section 11 provides that the author is first owner (subject to any contractual arrangements to the contrary) but:

u it is the owner who can sue for infringement and who has the ability to assign or license the right, in whole or in part (see CDPA section 96 and section 90–93 respectively)

u it is the identity of the author which is used to determine (a) whether the work attracts United Kingdom copyright; (b) the duration of copyright protection; (c) the existence of any moral rights (moral rights are explained in Chapter 8).


Chapter 8


Activity 8.2 Lord Millett’s statement of principle can be summarised thus.

u The court should first identify those features of the defendant’s design which the claimant alleges have been copied from the copyright work.

u In the case of an artistic work (as here) the court undertakes a visual comparison of the two designs, noting the similarities and the differences.

u The purpose of the examination is not to see whether the overall appearance of the two designs is similar, but to judge whether the particular similarities relied on are sufficiently close, numerous or extensive to be more likely to be the result of copying than of coincidence. It is at this stage that similarities may be disregarded because they are commonplace, unoriginal, or consist of general ideas.

u If there is sufficient similarity, not in the work as a whole but in the features alleged to have been copied, and the defendant had prior access to the copyright work, the burden passes to the defendant to satisfy the court that they did not result from copying.

u If the court finds that the defendant’s design incorporates features taken from the copyright work, the question is whether what has been taken constitutes all or a substantial part of the copyright work. This is a matter of impression, for whether the part taken is substantial must be determined by its quality rather than its quantity. It depends on its importance to the copyright work. It does not depend upon its importance to the defendant’s work.


Activity 8.4The Court of Appeal in Pro Sieben sets out a two-stage inquiry which must be undertaken before any of the fair dealing defences will apply.

u Whether the facts are objectively within the wording of the defence, although the words ‘criticism’, ‘review’, ‘current events’, etc. are to be given a wide interpretation.

u If so, whether the dealing was fair. The court will consider the amount of the original work which is taken, the purpose of the use, the necessity of such use, whether the original work has already been published and the motives of the copier.

Activities 8.5 and 8.6 No feedback provided.


Chapter 9


Activity 9.2 u The hand-carved furniture could be a work of artistic craftsmanship, in view of the

reasoning in Vermaat & Powell v Boncrest Ltd.

u The figurine would amount to a sculpture or, alternatively, a work of artistic craftsmanship.

u The mat could be argued to be an engraving, in view of the reasoning in Wham-O Manufacturing Co v Lincoln and Hi Tech Autoparts v Towergate Two Ltd (Nos 1 and 2).

Activity 9.3 u The drawing here is a design document and it is for an article: a dust-collecting bag

for a vacuum cleaner could hardly be said to be an artistic work. Section 51 applies, so the designer cannot rely on copyright.

u The sketch is likewise a design document for an article (the dress); however, it could be argued that the dress is a work of artistic craftsmanship (provided it satisfies the composite criteria in section 4(1)(c) of the CDPA and the cases discussed above). If that were so, section 51 would not apply and the designer would be able to rely on copyright.

u The painting is arguably not a design document, as it is not for an article, and so section 51 would not apply. Were a third party to copy the chair in a three-dimensional form, the artist could rely on copyright protection.


Activity 9.5 Those aspects of design right which are similar to copyright are the need for permanent form, and the property rights conferred on the owner.

Those aspects of design right which are different from copyright are:

u the rules on qualification for protection (you should first compare the definition of ‘qualifying person’ in section 217 with the definition in section 154, and then compare the definition of ‘qualifying country’ in section 217 with the equivalent provisions in sections 157–159)

u the rules on ownership (note in particular the effect of a commission on design right ownership when compared to copyright)

u the rules on duration.

Activity 9.6Your list should compare:

u what acts amount to primary infringement (look at section 16 CDPA and compare it with section 226)

u the fact that design right infringement has to be for commercial purposes

u the test for infringement (compare the decision in Klucznik with that in Designers Guild)

u the differences in available remedies

u the effect of innocence on the availability of damages (compare section 97 with section 233)

u the availability of licences of right.


Chapter 10

No feedback to activities.

Chapter 11

Activity 11.1 In answering this question, you need first to discuss the material covered in Chapter 2, specifically about whether it is possible to reconcile the views of Lord Diplock and Lord Scarman about the role of the court in protecting against unfair trading. You should then refer to the material covered in Chapter 10 about the modern functions performed by trade marks, particularly the views expressed in Arsenal v Reed about the scope of protection accorded to the trade mark owner. If these remarks are valid for registered trade marks should they also apply to passing off? The judgment of Aldous LJ implies that they should. You should note that the comments of Aldous LJ in the last-mentioned case about passing off are, in a sense, obiter, because the claimant did not appeal against the finding at first instance that there had been no passing off as there had been no origin confusion. However, Aldous LJ does say that he was not convinced that Laddie J’s reasoning was correct. The ‘traditional’ form of passing off, he says, is no longer the definitive ambit of the action and the absence of confusion here did not matter. The damage sustained was the dilution and gradual destruction of the claimant’s goodwill. Aldous LJ’s views seem therefore to be more in accord with those of Lord Diplock than Lord Scarman.


Activity 11.3 When dealing with collective goodwill (or shared reputation) the facts of the Chocosuisse case raise several issues.

u How extensive must the trade of the claimant be in order for them to share in the goodwill?

u What should an individual trader have to prove to show that they are a member of the class?

u When can a new member of the class sue for passing off?

u How are the courts to define the class where the product is not subject to regulatory control?

u How exact does the recipe have to be?

u Can the members of the class change the recipe?

You should study the judgment of Chadwick LJ carefully for guidance on these points.

Activity 11.4 The majority decision in the Harrods case has been criticised for its conservative approach to passing off. The majority stress the need for origin confusion, so that a case in passing off is not established where the customer simply establishes a ‘mental link’ with the claimant’s business without actually being confused into thinking that the defendant’s business is ‘something for which the claimant was responsible’. You may want to revisit your notes on the Harrods case once you have mastered the meaning of the phrase ‘likelihood of association’ found in sections 5(2) and 10(2) of the Trade Marks Act 1994 (discussed, respectively, in Chapters 12 and 13). The minority judgment of Sir Michael Kerr should be studied carefully. If Arsenal had been decided before Harrods, it is arguable that a different conclusion might have been reached, as the later case emphasises that the law should protect the trade mark owner against those who wish to take unfair advantage of the mark to sell their own goods or services.


Activity 11.5 Taittinger v Allbev can be regarded as ahead of its time, as it recognises dilution as a form of harm to the goodwill of the trade mark owner (you might want to return to this point once you have studied section 5(3) of the Trade Marks Act 1994 in Chapter 12 and section 10(3) in Chapter 13). Although the evidence in Taittinger showed that the average consumer was not misled, when they bought the defendant’s elderflower champagne, into believing they were buying the ‘real thing’, had the defendants (and others) been allowed to continue, then the champagne name would have been less valuable. The case therefore does not accord with the traditional view that passing off protects against origin confusion. Rather, it is an illustration of the court being more adventurous when dealing with other forms of harm to goodwill than simple diversion of custom. The judgment of Peter Gibson LJ should be studied carefully.

Activities 11.6-8 No feedback provided.

Activity 11.9 A good answer should:

u summarise accurately the criteria in Anheuser Busch and the views of Browne-Wilkinson VC in Peter Waterman v CBS

u contrast these with the rigid approach in Bernadin v Pavilion Properties

u consider also the more flexible thinking in Maxim’s v Dye and the Sheraton case

u refer also to the thinking in other Commonwealth countries which have considered that reputation alone suffices

u ask which approach is the most suitable for the twenty-first century.


Chapter 12


Activity 12.2The ECJ in Sieckmann gives the following reasons why there is a requirement of graphic representation.

u The need for the sign to be identified precisely for the sound operation of the trade mark registration system.

u The mark must be defined in order to determine the scope of protection accorded to its proprietor.

u The entry on the register must be accessible to competent (i.e. state) authorities, the public and to other economic operators (i.e. competitors).

u State authorities need to know the nature of the signs of which a mark consists in order to be able to carry out their duties of prior examination of applications and to maintain the register.

u Competitors need to know about the rights of third parties.


The criteria for graphic representation are that:

u it must be self-contained, easily accessible and intelligible

u the sign must always be perceived unambiguously as an indicator of origin

u as the mark can be renewed indefinitely, the representation must be durable

u the representation must be unequivocal and objective, so as to avoid any element of subjectivity.


Activity 12.4 The policy underlying section 3(1)(b) reflects the essential function of a trade mark of guaranteeing the origin of goods or services (SAT.1 SatellitenFernsehen GmbH v OHIM (SAT.2)). This policy is not concerned with leaving signs free for other traders (Nichols plc v Registrar of Trade Marks), rather of preventing the registration of signs which are not yet trade marks. However, in the case of marks consisting of single colours, the policy is not to restrict unduly the choice of colours available to other traders in the same line of business (Libertel Groep BV v Benelux-Merkenbureau).

The policy underlying sections 3(1)(c) and (d) is to ensure that descriptive signs and those common in the trade are left free for other traders: Windsurfing Chiemsee Produktions und Vertriebs GmbH v Boots und Segelzubehor Walter Huber, OHIM v Wm Wrigley Junior Co (DOUBLEMINT) and Merz & Krell GmbH & Co v Deutsches Patent- und Markenamt (BRAVO).

Activity 12.5 In Windsurfing Chiemsee, the ECJ listed the following factors to be taken into account by a tribunal when deciding whether a mark has acquired distinctive character.

u There should be an overall assessment of the evidence, taking into account the nature of the name in question (so that a very well known geographical name or a very descriptive mark will require greater evidence of use) as well as the market share held by the mark.

u How intensive, widespread and long-standing the use has been.

u The amount invested in promoting the mark.

u The proportion of the relevant class of persons who identify the goods as originating from a particular undertaking.

u Statements from chambers of commerce and other trade and professional associations.

Activity 12.6 Strowel gives the following examples of the shape marks found within Article 3(1)(e) Trade Marks Directive (section 3(2) of the TMA).

u As regards shapes resulting from the nature of the goods themselves (‘natural shapes’) he suggests an egg box, an umbrella or a carrier bag.

u As regards shapes necessary to obtain a technical result, he suggests the ‘Lego’ brick.

u As regards shapes which give substantial value to the goods, he suggests a set of miniature china houses or a children’s bath in the shape of a scallop shell. However, Strowel argues that this exclusion does not bar the registration of shapes added to foodstuffs such as chocolate, ice cream, crisps or drink bottles, because such shape is not the prime reason for the purchase. Even if the registered shape trade mark makes the goods more expensive, this is not ‘substantial’ value.

Strowel argues that as a matter of policy the provision on shape marks should be narrowly construed as it is a derogation from Article 2 in which shapes are declared to be registrable as trade marks. He also points out the presence of the words ‘exclusively’, ‘necessary’ and ‘substantial’ in the provision. The ECJ in Philips v Remington, however, took


a broader approach when interpreting the exclusion for technical shapes, disagreeing with Strowel’s argument that the availability of other means of achieving the same result should prevent the application of the exclusion. The Court does appear to agree with Strowel that the purpose of the shapes exclusion is not to prevent overlap with other means of intellectual property protection but to protect the interests of other traders.

Activity 12.7 In Oasis Stores, the Appointed Person listed the following factors which are to be taken into account when dealing with an opposition under section 5(3).

u The inherent distinctiveness of the earlier trade mark.

u The extent of reputation which it enjoys.

u The range of goods or services for which the earlier mark enjoys a reputation.

u The uniqueness or otherwise of the mark in the market place.

u Whether the respective goods or services, though dissimilar, are in some way related or likely to be sold through the same outlets.

u Whether the senior mark will be any less distinctive than it was before.

u Whether the reputation of the earlier mark is likely to be damaged or tarnished in some significant or material way.

This is a useful list which you should memorise.


Chapter 13

Activity 13.1–13.2 No feedback provided.

Activity 13.3 The ‘triad of protection’ for the trade mark owner found in section 10 comprises the following.

u The ability to prevent the use of the identical sign for the identical goods or services. The requirement of identity is to be strictly applied and assessed though the eyes of the consumer (LTJ Diffusion SA v Sadas Vertbaudet SA (ECJ)). The comparison is between what the defendant has used with the claimant’s registry entry, both as regards goods (British Sugar v James Robertson) and the mark (Philips Electronics NV v Remington Consumer Products).

u The ability to prevent the use of the same or similar sign for the same or similar goods or services, provided that there is a likelihood of confusion on the part of the public, which includes a likelihood of association. Similarity of signs is to be determined in accordance with Sabel v Puma (ECJ). Similarity of goods is to be determined in accordance with Canon (ECJ). Sabel is also the case on the meaning of ‘likelihood of confusion’, complemented by Canon and Lloyd which explain the ‘interdependence of factors’ (resulting from Recital 11 to the Directive) so that all circumstances must be taken into account.

u The ability to prevent the use of the same or similar sign for any goods or services where the senior mark has a reputation and the use of the junior mark without due cause would take unfair advantage of or be detrimental to the distinctive character or repute of the senior mark. All elements of this composite requirement must be shown. The meaning of ‘reputation’ and the criteria for establishing it can be found in General Motors. The policy of protecting marks with a reputation is explained by the ECJ in Davidoff v Gofkid and Adidas v Fitnessworld.


Activity 13.4 Any discussion of the decision in Deenik should identify the relevant facts. These were that Mr Deenik ran a garage in the Netherlands, specialising in the sale of secondhand BMW cars, and in the repair and servicing of such cars. He was not part of the dealer network run by BMW. The car manufacturer sued him for trade mark infringement, taking particular objection to the way in which his advertisements described him as a ‘BMW specialist’. In reply, Mr Deenik relied on the defences in Article 6(1)(c) and Article 7.

The ECJ stated that Article 7 was the relevant defence to the sale of second hand cars but that Article 6(1)(c) was appropriate to the activities of repair and servicing. It applied the same test to each defence, noting that both defences sought to achieve a balance of interests, Article 7 balancing the rights of the trade mark owner with the interests of the internal market, and Article 6 balancing the rights of the trade mark owner with those of other traders. Even though use of another’s trade mark may be legitimate as a means of informing consumers about the nature of the defendant’s business, such use will not be permitted if it was contrary to the duty to act fairly in relation to the legitimate interests of the trade mark owner. Therefore if the advertisements for Mr Deenik’s business either misled consumers into thinking that there was a commercial connection with BMW (in particular that the defendant was part of the dealer network) or if they sought to take unfair advantage of the distinctive character or repute of the trade mark, they would lose the benefit of both defences.

Activity 13.5 The ruling of the ECJ in O2 Holdings Ltd v Hutchinson 3G Ltd begins with the statement that the use of a competitor’s trade mark in a comparative advertisement was use for the advertiser’s own goods and services and therefore prima facie infringement. However, the CAD was intended to promote comparative advertising. Further, Recitals 13 to 15 of the consolidated version of the CAD cross-refer to the Trade Marks Directive and so it is necessary to read the CAD into the limitations on the trade mark owner’s rights. The trade mark owner could not object to the use of an identical or similar sign by a third party in a comparative advertisement which complied with the CAD. Compliance with the CAD is therefore a complete defence to trade mark infringement unless the advertisement gives rise to a likelihood of confusion. This means that most direct comparative advertisements (‘our washing powder is cheaper than your washing powder’), where the consumer is alerted to the fact that there are two rival producers, will get the protection of the defence. Only an indirect comparison, where the consumer does not appreciate that there are two different sources of supply and consequently confuses the two, will amount to infringement. The Court added that the trade mark owner could not object to the use by a third party of a similar sign if this did not give rise to a likelihood of confusion, regardless of whether the advertisement satisfied all the conditions of the CAD.

Activity 13.6 The cumulative guidelines from Hoffmann-La Roche, Paranova I and Paranova II summarised by the ECJ in Boehringer I and Boehringer II are as follows.

u It must be shown that conduct of the trade mark owner objectively partitioned the market.

u There must be an indication on the goods that they have been repackaged.

u The importer must personally give 15 days’ notice to the trade mark owner that they intend to repackage the goods.

u There must be no physical impairment.

u Samples must be supplied if requested.

u There must be no mental impairment.

u It must be shown objectively that there was a necessity to re-package (i.e. to enable the importer to have access to the market).



Chapter 14

Activity 14.1 Your answer should do the following.

u Summarise concisely the facts of the two cases.

u Highlight the fact that the cases do not deal with the same aspect of merchandising. Lorimar was concerned with the attempt to stop the use of names from a television series to sell merchandise (jeans and restaurant services) when the claimant’s business was concerned with the creation of films and television programmes. In Irvine, the case was concerned with the use of a celebrity’s image to promote the programmes offered by a radio station, thereby implying that the claimant had in some way approved the advertisement.

u Point out the significance of the fact that in Irvine the claimant was in the business of granting licences to others to use his image, whilst in Lorimar the defendants were not in competition with the claimants.

u Comment that in Lorimar the court recognised the consumer’s receptiveness to image-related advertising but regarded the defence of ‘no common field of activity’ as conclusive; in Irvine, Laddie J simply recognised the practice of celebrity endorsement. However, the fact that the claimant already derived a lot of income from endorsement showed that he had a business goodwill capable of being protected.


Activity 14.3 Mirage Studios v Counter-Feat Clothing can be regarded as a significant decision in favour of the practice of merchandising. Browne-Wilkinson VC appears to adopt the thinking of Australian courts. He says that the public are used to the practice of merchandising and assume, when they see a product bearing the name or image of a fictitious character, that there has been some sort of licence. However, the case should be treated with a degree of caution because:

u there was a finding of fact that both claimant and defendant were in the business of merchandising

u what was being protected was a series of copyright works, so that the case may not be appropriate authority in cases where merchandising is based on names

u there was an arguable case in copyright infringement (remember the case involved an application for interim relief)

u there was a finding of fact that the claimant was in the business of licensing copyright images, and so had suffered harm to its business goodwill as a result of the defendant’s conduct.

Activity 14.4 Quality control is an important matter in trade mark licences because of the ability of any person to apply to have the trade mark revoked. The grounds of revocation can be summarised as non-use of the mark, generic use and deceptive use. Although any use of the mark with the consent of the owner will protect against revocation for non-use (Scandecor), uncontrolled use may render the trade mark vulnerable to attack for deceptive use. Section 46(1)(d) specifically refers to deception as to the quality of the goods. Although it does not refer to deception as to the origin of the goods, the House


of Lords in Scandecor thought that the section did cover such deception (the referral to the ECJ on this point was withdrawn). In Scandecor, it was suggested that if a trade mark owner does not make effective use of appropriate contractual clauses imposing quality control on the licensee, there is the risk that in due course the public will believe the licensee to be the source of the goods, not the trade mark owner. The mark will become deceptive. This argument may usefully be compared with the thinking of the ECJ in Arsenal about the role of the trade mark in guaranteeing quality.

Those cases which have provided protection for character merchandising (specifically the MUPPETS and NINJA TURTLES cases) each concerned an image owner who had insisted on quality control provisions being inserted into the licensing agreements. The fact that in each case the defendant’s products were of inferior quality was significant in establishing harm to the claimant’s goodwill under the ‘classic trinity’ of passing off as stated by Lord Oliver in Reckitt & Colman v Borden.

Chapter 15


Activity 15.2Machlup and Penrose identify four justifications for patents.

u That there is a natural property right in ideas; appropriation of ideas is therefore tantamount to stealing.

u Justice demands that there should be a reward for services which are useful to society; patents are useful and so should be protected.

u Patents are necessary to secure industrial progress. Incentives are necessary to ensure that inventions are made; alternatively, incentives are necessary to ensure that inventors disclose information in return for patent protection, such information in due course becoming part of the store of human knowledge to be shared by all.

u Industrial progress is desirable to society. If there were no patents, inventions would be kept secret, so disclosure is the quid pro quo for exclusivity.

You should link these arguments by Machlup and Penrose with case law which has referred to them, for example Re Asahi KKK’s Patent, Dranez Anstalt v Hayek and Eli Lilly and Company v Human Genome Sciences Inc.

Activity 15.3 The judgment in Dyson v Hoover is structured in such a way that all the issues can be dealt with in a logical manner. This technique can be used as an ‘action plan’ for dealing with patent problems. The order in which the issues are dealt with is:

u the identification of the background of the invention (here it was that the vacuum cleaner industry assumed that vacuum cleaner bags had to be used to collect dirt but that these possessed certain disadvantages)

u the identification of the inventive concept (or ‘epitome’) of the invention (here it was the patentee’s insight that vacuum cleaners could use a dual cyclone as a means of collecting large and small particles of dirt without the necessity of using a bag)

u the identification of the attributes of the skilled addressee of the patent, namely their qualifications and experience (here it was a graduate engineer with practical experience in the vacuum cleaner industry, plus the identification of+ the common general knowledge which the skilled reader possessed


u the allocation of meaning to the claims in the light of the description and drawings (the court considered whether the patentee had used everyday English, or instead whether the patentee provided special definitions of key words in the specification, or instead whether the meaning of key words in the specification had to be ascertained from specialist dictionaries)

u the determination of infringement (the court made a comparison of the claims with the defendant’s product)

u the determination of the validity of the patent (the court made a comparison of the claims with the prior art).

You may find it useful to adopt a similar template when dealing with problem questions on patents.

Chapter 16


Activity 16.2 Schedule A2 (incorporating the key provisions of the Biotech Directive) provides that an invention shall not be considered unpatentable on the ground solely that it concerns a product consisting of biological material or a process whereby such material is to be produced. Biological material which is isolated from its natural environment or produced by a technical process may be the subject of an invention even if it previously occurred in nature (paragraphs 1 and 2). These provisions enact the well-established principle that although one cannot patent something found in nature (it would amount, at best, to a mere discovery) it is possible to patent a product which incorporates living matter or a process for replicating living matter, provided the positive requirements for patentability are met.

The Schedule then declares that the following are not patentable inventions because (in the light of the recitals to the Biotech Directive) they are contrary to morality.

u The human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene.

u Processes for cloning human beings.

u Processes for modifying the germ line genetic identity of human beings.

u Uses of human embryos for industrial or commercial purposes.

u Processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes.

Activity 16.3 Comparison of the two EPO decisions in HARVARD/Onco Mouse and LELAND STANFORD/Modified Animal shows that over a period of time, the EPO has perhaps hardened its attitude towards challenges to patents on ethical grounds. Initially it adopted the view that it had a duty to balance the interests of benefits to society through medical research, on the one hand, with preventing cruelty to animals on the other. Later, it seems to place the onus on those challenging the patent to prove conclusively and by objective, scientific evidence that the patent will cause harm. Arguments that many people find animal experiments distasteful are not sufficient: it must be shown that an overwhelming majority of people find such an activity abhorrent.



Activity 16.5 Regarding the law on methods of treatment, your summary should read:

u methods of treatment are not patentable under section 4A(1)

u new substances (and equipment) used in such treatments are patentable (section 4A(2))

u known substances having a first medical use are patentable under section 4A(3), novelty being found in the new use (this would be have to be in the form of a ‘purpose limited product claim’, for example, ‘substance x for use as a treatment for y’)

u known substances having a second medical use are patentable under EISAI, now enacted in section 4A(4), novelty residing in the subsequent (unexpected) therapeutic use. While this used to have to be worded as a ‘Swiss form claim’, for example, ‘use of x for the manufacture of a medicament for the treatment of y’, which was a process claim, it suffices today if it is worded as ‘substance x for use in treatment of disease y’ which again is a purpose limited product claim.

Activity 16.6 Sachs LJ puts forward a number of synonymous tests which can be used in order to decide whether there has been anticipation.

u ‘Would the prior use infringe if carried out today?’ This can be referred to as the ‘infringement test’. Although disapproved by Lord Hoffmann in Merrell Dow v Norton, he later changed his mind in Synthon and said that it was the test to be applied.

u ‘Is the claimed subject matter derivable directly and unambiguously from the (prior) publication?’

u ‘Does the earlier material point inevitably to the later invention?’

u There is a difference between a ‘signpost’ and a ‘flag-post’ contained (metaphorically speaking) in the prior art. Only the latter will suffice to destroy novelty (although the former may suffice to destroy inventive step).


Activity 16.8 The test for inventive step given Jacob LJ in Pozzoli SpA v BDMO SA is to:

u identify the person skilled in the art and their common general knowledge

u identify the inventive concept (the epitome or essence of the invention), bearing in mind the problem which the inventor was trying to solve

u identify the differences between the prior art and the inventive concept

u decide whether those differences, viewed without knowledge of the invention, would have been obvious to the skilled man.

You should note that the second requirement is the identification of the inventive concept (not the inventive step – a very common misquotation which you should endeavour to avoid). Identification of the inventive concept was discussed in Chapter 15, as were the skilled addressee and his/her common general knowledge. If you are unsure about these three ingredients of the Pozzoli formula, please reread your notes on Chapter 15. The remaining steps in the Pozzoli formula require the court, in the light of the inventive concept, the skilled addressee and common general knowledge, to compare the prior art with the invention and then to decide whether the differences are obvious. Although there is a degree of circularity in Jacob LJ’s statement of principle, it has been used and approved since.

This is a formula which you should memorise and endeavour to apply.


Chapter 17


Activity 17.2 Applying the wording of section 39(1), the answers are as follows.

a. The nature of the duties of a trainee solicitor is such that an invention would not be expected to result from the performance of his/her duties; the invention will belong to the employee.

b. As the lecturer teaches in the School of Sociology, it is debatable whether an invention would be expected to result from the performance of his/her duties which would involve teaching and research in social policy rather than applied technology.

c. The nature of the hairdresser’s duties as an employee would be such that an invention would not be expected to result.

d. Depending on the nature of his/her appointment, a sales director might be treated as falling within section 39(1)(b). You should refer to the decision in Staeng Ltd’s Application for an example of how the court examined the nature of the director’s pay and benefits before concluding that they had the duty to further the interests of the employer’s business. In such a case the invention would belong to the employer.

Activity 17.3 Applying the statutory criteria for compensation, the situations will be as follows.

a. If there is no patent, then the compensation scheme is not available. The employer cannot be forced to apply for patent protection.

b. Under section 40(3), the presence of a collective agreement (that is, an agreement between the employer and one or more trades unions) will exclude the operation of the compensation scheme, no matter what the terms of that collective agreement may be.

c. Under section 42, any contractual term which seeks to diminish the employee’s rights under the Act is rendered unenforceable.

d. This part raises two separate points, namely whether the new company set up by the employer is to be treated as a ‘connected person’ under section 40(1) and section 40(2) (more information would be needed) and whether the compensation scheme extends to former employees who have been made redundant. The definition of ‘employee’ in section 43(2) and the treatment of deceased employees in section 43(6) suggest that former employees are not protected.

e. ‘Outstanding benefit’ has been interpreted as meaning financial reward, so the fact that the invention has won a prize does not count.

Chapter 18

Activity 18.1 As regards direct infringement, because this is a product patent, the list of infringing acts is that contained in section 60(1)(a) of the Patents Act 1977. You might like to think of Cornish’s analysis that infringing conduct can be divided time-wise into three phases, the most important of which is the exploitation of the patent by manufacture. The other two phases are pre- and post-manufacturing conduct.

On this analysis, the principal defendant will be Moulds Ltd, who has made the product. In respect of post-manufacture infringement, the relevant conduct is:

u disposing of the product – this has been done by Moulds Ltd, by Pharmagen Ltd and by Blacks


u offering to dispose of the product – this has been done by Blacks as a result of the product being on display in any of their shops (see Gerber v Lectra)

u using the product – this has been done by the hospital when prescribing the drug to its patients

u keeping the product – this has been done by Moulds Ltd, Pharmagen Ltd, Blacks and the hospital when they have stocked it preparatory to their infringing conduct given above.

As regards indirect infringement (i.e. pre-manufacture conduct), consider the ingredients which are mentioned. Tom’s supply of the copper sulphate will not infringe because although this would be a ‘means essential’ under section 60(2), arguably he will have the defence in section 60(3) that this is a staple commercial product. Harry, however, will have supplied the ‘means essential’ required for liability for indirect infringement, subject to the requirement of knowledge. The ‘staple commercial product’ defence will not be available to him as the moron tribromide has to be specially made.

If the product had been made in France, Pasteur would not infringe by making, as its conduct occurs outside the United Kingdom (note again the general wording at the start of section 60(1)). Moulds Ltd would be liable for importing rather than making. It might be possible to argue, however, that Pasteur SA is a party to a ‘common design’ so as to render them liable as a joint tortfeasor, but the criteria in Sabaf SpA v Meneghetti would need to be established.


Activity 18.4 In Catnic Components v Hill & Smith Lord Diplock counsels against the use of ‘meticulous verbal analysis’ which lawyers tend to use. Instead he says the following question should be asked. Would persons, with practical knowledge and experience of the kind of work in which the invention was intended to be used, understand that strict compliance with a particular descriptive word or phrase appearing in a claim was intended by the patentee to be an essential requirement of the invention so that any variant would fall outside the monopoly claimed, even though it could have no material effect upon the way the invention worked? However, he then adds:

The question, of course, does not arise where the variant would in fact have a material effect upon the way the invention worked. Nor does it arise unless at the date of publication of the specification it would be obvious to the informed reader that this was so. Where it is not obvious, in the light of the then-existing knowledge, the reader is entitled to assume that the patentee thought at the time of the specification that he had good reason for limiting his monopoly so strictly and had intended to do so, even though subsequent work by him or others in the field of the invention might show the limitation to have been unnecessary. It is to be answered in the negative only when it would be apparent to any reader skilled in the art that a particular descriptive word or phrase used in a claim cannot have been intended by a patentee, who was also skilled in the art, to exclude minor variants which, to the knowledge of both him and the readers to whom the patent was addressed, could have no material effect upon the way in which the invention worked.

Hoffmann J in Improver reformulates Lord Diplock’s initial question and the further statement as follows:

If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or acontextual meaning of a descriptive word or phrase in the claim (‘a variant’) was nevertheless within its language as properly interpreted, the court should ask itself the following three questions:

1. Does the variant have a material effect upon the way the invention works? If yes, the variant is outside the claim. If no –

2. Would this (i.e. that the variant had no material effect) have been obvious at the date of publication of the patent to a reader skilled in the art. If no, the variant is outside the claim. If yes –


3. Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention. If yes, the variant is outside the claim.

Lord Hoffmann, as he became, then restated the law again in Kirin Amgen, appearing to return to the test first set out in Catnic. The question to be asked today when there is a difference between the claimed invention and the alleged infringement is ‘what would a person skilled in the art have understood the patentee to have used the language of the claim to mean?’

It is very important that you can accurately state what the Kirin Amgen question is.

Activity 18.5 The differences between the majority and the minority in Wheatley v Drillsafe lie in the way in which the court approaches the issue of inventive concept. The majority take a narrower view of the patent’s inventive concept, regarding it as the use of a ‘centre-less’ drill cutter for drilling holes in underground petrol storage tanks without the need for the use of a pilot drill. The minority (Aldous LJ) takes a broader view of the inventive concept: what mattered was that the defendant’s probe did not enter the tank (thereby avoiding the risk of sparks) which was the problem which the patent had sought to solve. Aldous LJ therefore follows the advice of Lord Hoffmann in Biogen v Medeva in identifying the problem to be solved as part of the process of identifying the inventive concept (see the discussion of the inventive concept in Chapter 15). What Wheatley v Drillsafe demonstrates is that it is possible for the underlying inventive concept to be drawn broadly or narrowly by the court simply as a consequence of differing judicial opinions. This means that contrasting answers will be obtained to the Kirin Amgen question in each instance because depending on the nature of the inventive concept, the skilled addressee will view the claims in a different light.

Activity 18.6 Lord Hoffmann’s speech in Kirin Amgen makes clear that the scope of protection of a patent is determined by the claims. Anything which extends protection outside the claims is expressly prohibited (para 44). There is therefore nothing which equates to the US ‘doctrine of equivalents’. The Protocol is concerned with the construction of Article 69. It says that literalism should be avoided, but otherwise says that one should not go outside the claims. Accordingly, fair protection for the patentee together with certainty for third parties are both catered for by asking ‘what is the full extent of the monopoly which the person skilled in the art would think he was intending to claim’? Therefore Catnic is in full accord with the Protocol (paras 47 and 48). Purposive construction does depend on context: strict compliance is appropriate where ‘figures, measurements, angles and the like are given’, and no doubt there are other cases where a word or phrase is used in some looser sense. The Protocol questions are difficult to apply in patents such as the one in the instant case where the language used was very exact. Even if one resorted to the inventive concept, the Protocol questions answered themselves, but even here it was possible to come to different conclusions as to what was the inventive concept. The Protocol questions were not a substitute for trying to understand what the person skilled in the art would have understood the patentee to mean by the language of the claims.

Lord Hoffmann appears to be saying that where the patent involves sophisticated technology, of necessity the language of the claims will have to be precise (otherwise there might be a risk of ‘Biogen insufficiency’), so that where the claims consist of exact language, the Protocol questions do not assist the court. The only issue will therefore be to ask what the skilled addressee understood the patentee to mean. This appears to mark a complete return to Lord Diplock’s question in Catnic.

If need be, return to your notes on Catnic to see exactly what Lord Diplock said about purposive construction.

intellectual property in uk

Documents