SpicyIP Tidbit: IPXI releases latest edition of its Rulebook.

The IPXI (Intellectual Property Exchange International) is the world's first financial exchange for licensing and trading intellectual property rights. My previous post on this can be found here.  The IPXI, last week, released the Rulebook that is to govern its first offerings.  This Rulebook is the product of interactions among  the various members of the IPXI which includes many IP owners as well. This Rulebook, which includes the additions recommended by the IPXI Rules Committee,(which is composed of the representatives of the founding members of IPXI) to the first Working Edition of the rulebook, will govern the conduct of all of IPXI members with respect to all their transactions on the floor including issuance, trade, use and enforcement of the Unit License Rights that are offered through the IPXI. The first Working edition of the Rulebook was approved by the Rules Committee in May 2012. These new additions include new chapters which deal with the issuance of the Unit License Rights, the trading and consumption of these ULRs, hearings and sanctions for violation of rules of the IPXI as well as provisions for auditing  and compliance by IPXI members, as reported on the IPXI website. The Rulebook can be freely downloaded from here.

The Times Publishing House threatens to sue our blogger for alleged defamation - we ain't going down without a fight!

Aparajita Lath - SpicyIP Blogger

Take a good hard look at the photograph on the right. It’s a photograph of one of our youngest bloggers – Aparajita Lath, an innocent 22 year old gifted law student at the National University of Juridical Sciences (NUJS), one of the top law schools in India. Do you think this girl is capable of hurting anybody much less defame one of the largest media companies in India?

Well, apparently there is somebody either at Times Publishing House Ltd. or in their lawyer’s office i.e. K. Dutta and Associates, who clearly think Aparajita is capable of defaming them because they recently served her with a legal notice threatening both civil and criminal action. She received the notice on April 23, 2013 for a post she wrote on SpicyIP on February 12, 2013 on the 19 year dispute between the Financial Times Ltd. and the Times Group over the “Financial Times” trademark – apparently it took them a few months to figure out that were feeling defamed.

The Times Publishing House Ltd, is a part of the Times Group which includes companies like Bennett Coleman which publishes what they claim to be one of the largest circulating English newspapers in the world – The Times of India. Other components of this media empire include the television channel – Times Now and the radio company – Entertainment Network India Ltd. (ENIL) which runs the Mirchi brand of radio stations across the country. The entire empire is owned and run mainly by these two men pictured below.

Samir Jain and Vineet Jain - Picture from here

The legal notice served on Aparajita by the Times Publishing Houses Ltd. and Shamnad’s fitting response can be accessed over here and here.

According to the legal notice, served on Aparajita, the publication of her post, “caused an irreparable injury and loss of reputation” to Times Publishing House Ltd. The following paragraph is even better: “Pursuant to the publication of the impugned article our Client has been contacted by several persons, inquiring about the same. Our client has been questioned and subjected to contempt and ridicule and has suffered immense prejudice and loss of goodwill, reputation, standing and goodwill in the industry”. Oh my! And I guess the sky is going to fall on our heads next because of one post on this blog.  

The allegedly defamatory post by Aparajita can be accessed here. In the post, she carried an excellent summary of the 19 year old litigation between Financial Times Ltd. and Times of India Group over the trademark “Financial Times” & “FT”. Aparajita’s post had very carefully referenced and summarized a number of articles which appeared in the Mint about the dispute and from the information we have, the Mint has not been sued as yet.

The first article was written by Paranjoy Guha Thakurta one of India’s finest independent journalists. You can see an interview with him over here. In his article, Paranjoy covers the litigation between FT and TOI extensively and from what I understand he too has received a legal notice from Times Publishing House Ltd. for alleged defamation.

Paranjoy Guha Thakurta - Image from here

There is some history of simmering tension between Paranjoy Guha and the Times Group. A few years ago, Paranjoy Guha was one of the authors of a damning Press Council of India report which brilliantly documented the scourge of ‘paid news’ in India. At the time Press Council of India, which is run by the media itself, refused to allow the report to be released to the public and the only reason it became public was because the Central Information Commission ordered the release of the report under the Right to Information Act, 2005. It can be accessed over here. Turns out that the report had documented extensively the practices of Times Group and whether or not these practices would qualify as “paid news”. The report is well worth a read and I’m guessing that it upset the Times Group to no end.

The second article referenced by Aparajita was an interview by well-known lawyer Harish Salve who is representing FT in this dispute. Salve’s interview is quite candid and he is hardly appreciative of TOI’s strategies in this litigation. We don’t know whether even Salve has received a notice for defamation. Given

Harish Salve - Image from here

that the notice served on Aparajita has taken objection to Salve’s comment, he too should have received a legal notice otherwise they really can’t sue Aparajita. A third article referenced by Aparajita was by a Mint reporter.

For those of you who have read Aparajita’s post, you will agree with me that there is nothing in her post which even remotely qualifies as defamatory. She has taken care to base each and every assertion on the Mint articles, which them-selves were a fair comment on an issue of public importance. The comments which were not based on the Mint article were also fair comments based on valid facts.

Even presuming, for sake of argument, that some facts were wrong in the post, the remedy is to send us a clarification, more so when the party making such an allegation, is a part of a media conglomerate that claims to publish one of the most circulated English papers in not just India but the world. It is not like the Times of India has never made an error in reporting and if they were to be sued for defamation every time they made a mistake they would have been bankrupt by now. Let me just point out to a few instances of poor reporting by the Times of India which we have documented on this blog. In November last year, we carried this post on how a particular news report in the Bangalore edition of the Times of India was nothing but an unattributed reproduction of a press release. We also carried other posts over here and here where we pointed out the inaccuracy in ToI news reports.

The most egregious portion of the legal notice however is the threat of criminal action against Aparajita for alleged defamation. Egregious, since this comes from a newspaper. The Editors Guild of India has been campaigning for the abolition of criminal defamation laws because their reporters were constantly being threatened under these outdated laws and yet Times Publishing House thinks nothing of threatening criminal action against a 22 year old law student. What makes things worse is the fact that the move to have criminal defamation laws abolished was reported in the Times of India itself over here.

As our readers may know, last year, Shamnad was sued by NATCO for alleged defamation (you can read his defence here) and now Aparajita receives a legal notice threatening legal action – clearly blogging is becoming a riskier activity and the tragedy with increasing risk, is the possibility that bloggers will try to self-censor in the fear of offending giants like the Times Group.

We may not be as big as the Times Group but we are not going down without a fight. We are 100% behind Aparajita in this fight against the Times Group and if she is sued we will provide her with all support. If we submit to this defamation notice today, every Tom, Dick and Harry will be sending us defamation notices every time they are ‘hurt’ and in a country like this it does not take too much for eggshell egos to be hurt at the drop of a hat.

Microsoft v. Motorola: A FRAND-ly formula for fixing royalties?

The ‘FRAND wars’ hit India earlier this March with Swedish based Ericsson suing Mircomax Informatics Ltd. for alleged infringement of their standard essential patents (SEPs) relating wireless technology standards. As an interim arrangement, Micromax agreed to pay Ericsson 1.25% to 2% on the sale price as royalty to Ericsson, an incredibly high rate as Prashant pointed out earlier over here. The fixing of FRAND (fair, reasonable and non-discriminatory) royalty rate has been most contentious in the telecom industry with numerous lawsuits and anti-trust complaints filed all over the world. The Microsoft v. Motorola decision of the US District Court for the Western District of Washington delivered on April 25, 2013, is the first authoritative guidance on fixing FRAND royalties. 

Judge James L. Robart delivered a rigorous 207 page findings of facts and conclusion of law on fixing of FRAND royalty rate over Motorola’s SEPs on wireless local area network (WLAN) (802.11 Standard) and video compression technology (H.264 Standard). The suit was instituted by Microsoft in 2010 for breach of FRAND commitment as Motorola (now a subsidiary of Google Inc.) sought 2.25% of net sale price on their products. As per the findings, Microsoft has to pay a total of USD 1.8 million as opposed to Google’s initial demand of USD 4 billion. This decision is significant as its sets out, for the first time, a framework for negotiating a FRAND royalty rate. The opinion adequately addresses the problems of patent hold-up and royalty stacking plaguing the industry and has been well received so far.   

[Those familiar with SEPs and FRAND obligations can skip over to ‘Nature of FRAND negotiations’.] 

STANDARD ESSENTIAL PATENTS (SEPs) & FRAND OBLIGATIONS 

Ever wondered why USB ports in all PCs and laptops adhere to uniform specifications? (or why USB device (a dongle) connects to all PCs and laptops?) A bunch of tech giants in 1994 formed USB Implementers Forum Inc. to replace, simplify and improve usability of numerous ports that existed at the back of a computer. The Forum is a standard setting organization (SSO) which defines and prescribes standards for the industry to ensure interoperability between USB devices. Likewise, you don’t always need Google Chrome to open your Gmail account! To ensure interoperability and optimal usability of devices, companies voluntarily participate in standard setting organizations (SSOs) to develop, define, revise, amend and coordinate standards and protocols to be followed in manufacturing devices. 

In developing these standards, companies agree to license their patents, on terms that are either royalty-free (RF) or FRAND conditions, if the standard incorporates patented technologies. As a bargain, companies get access to one another’s technologies on FRAND terms, a phenomenon known as ‘reciprocity’. The SSOs, however, leave the specifics of the FRAND terms for patentees and implementers to negotiate on a case to case basis. These negotiations assume greater importance as the implications could affect ordinary consumers in accessing interoperable technologies. Unfortunately, the industry hasn’t been successful so far in arriving at a consensus on the scope and nature of FRAND license. 

NATURE OF FRAND NEGOTIATIONS 

Image from here

The concept of ‘hypothetical’ negotiations has been widely used in the US in in fixing ‘reasonably royalties’ in awarding damages in patent infringement suits. The negotiations of this kind adopt a ‘willing licensor-willing licensee’ approach which ‘attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began’. Applying the 15 factor analysis laid down in the seminal Georgia Pacific Corporation v. U.S. Plywood Corporation, Judge Robart modified the factors to fit the FRAND framework i.e. to promote ‘widespread adoption of the standard’. 

The following are few key distinguishing features of FRAND negotiations from ordinary patent licensing negotiations: Firstly, past royalty rate for an SEP is relevant only if the licensing conditions are comparable to FRAND circumstances. Secondly, SEP holders’ established policy of safeguarding its monopoly reflected from its past licensing practices is irrelevant. It doesn’t matter if the SEP holder is Apple or Google, the standard should be accessible to all seeking implementers. Thirdly, the SEP holder is stripped off any negotiating power against its competitors. Whether it’s Galaxy Ace or iPhone, Motorola cannot discriminate between Samsung or Apple. 

PATENT HOLD-UP & ROYALTY STACKING 

Judge Robart throughout the analysis was conscious of patent ‘hold-up’ and ‘royalty stacking’ in the industry. A patent hold-up occurs when the patentee discloses information on their patented technology only after its incorporation into a standard to command higher royalties. Consequently, the SEP holder demands the value created in the technology by its adoption as a standard (‘hold-up’ value) and the implementer ‘locked-in’ to the standard and is ‘held-up’ due to the patent. Under the ‘willing licensor-willing licensee’ approach, the ‘reasonable’ royalty is determined from the date of infringement. Judge Robart rightly modified this to the time just before the adoption of patent as a standard. Secondly, the reasonable royalty rate is based the ‘contribution of the patented technology to the capabilities of the standard, and in turn, the contribution of those capabilities of the standard to the implementer and the implementer’s products’. Both these essentially take out the ‘hold-up’ value created as a result of adoption as a standard. 

The second problem facing SEP licensing is that of ‘royalty stacking’ (Prashant’s post briefly touches on this problem here). The problem occurs when a standard incorporates several patents held by distinct right holders. Judge Robart addressing this issue stated that the ‘hypothetical negotiation almost certainly will not take place in a vacuum: the implementer of a standard will understand that it must take a license from many SEP owners, not just one, before it will be in compliance with its licensing obligations and able to fully implement the standard.’ Therefore, FRAND royalty rate should necessarily account for other SEPs encumbered in complying with a standard.

Guest Post: A rejoinder from the IPKat

Continuing with our debate, between Darren Smyth of IPKat fame and Siva Thambisetty, on the merits of the Supreme Court's decision in the Novartis case, we have for our readers a rejoinder from Darren in response to Siva's last post on this issue.

The two previous posts on this issue can be accessed over here and here. 

A Rejoinder from the IPKat, 

by Darren Smyth 

I was very interested to read the thoughts of Siva Thambisetty. However, with the greatest of respect I think that she is also committing a category error, this time in relation to enablement. 

What a patent must enable is the invention. It most emphatically does not have to enable every possible infringement. The invention of the Zimmermann patent is (for the present purposes) Imatinib. Not the particular salts. It is imatinib which must be and was enabled. 

Consider two possible salts of imatinib (leaving aside for the time being, for the purposes of clarity of argument, the mesylate). One is the hydrochloride salt which was explicitly disclosed in Zimmermann. The other is a salt of a new acid, which I shall call thaumatic acid, because of its miraculous properties. This is not disclosed in Zimmermann. Nor in fact in any document until I came along and invented it just now. It is completely clear to me that both imatinib hydrochloride and imatinib thaumatate infringe the Zimmermann patent. In the infringement analysis, it does not matter what inventive extra features are added, the infringement test is the same. Whether the infringed patent “enables” those extra features is intrinsically irrelevant. 

I would actually put the position more boldly if pushed. The Zimmermann patent claims ended “or a pharmaceutically acceptable salt thereof”. If they had not so ended, so that the relevant claim effectively simply recited “Imatinib”, I consider that Novartis would have been quite correct to argue that it was infringed by imatinib mesylate (and imatinib hydrochloride and imatinib thaumatate). The invention, imatinib, would have been reproduced in the infringement, so why should it not be considered to infringe? But then there would have been no question of the Zimmermann patent “disclosing” the salt, because it would not have done so. 

Siva Thambisetty then refers to, and rather appears to endorse, yet another category error by the Supreme Court, this time in relation to “elastic” claims. Paragraphs 140 to 157 of the Supreme Court judgment take a passage from Terrell which is about interpreting a term in the claim one way for infringement and another way for validity, and then wrongly use this to say that the coverage (scope in relation to infringement) and the disclosure of a patent are the same. The point that Terrell is making is a quite different one – it is not permissible to construe a term (such as in the present case “salt”) one way for validity and another for infringement. But Novartis construed “salt” in relation to the Zimmerman patent at all times in only one way – to mean “salt”, no more and no less. Again by carelessly mixing up concepts (each of which is perfectly valid in itself) fundamental errors are committed. Incidentally, a much more vivid illustration of the “elastic” claim concept is the “Angora Cat” analogy. But this has nothing to do with the case before the Supreme Court. 

At the risk of alienating any sympathy that I may still have in the hearts of your readers, I really don’t accept that the problem is that “Patent lawyers live in a bizarre world where we are used to inverted categories of thought that makes little sense to external observers. Other lawyers, even other IP lawyers, often struggle to understand the pretzel shaped law that we have come to take for granted here. So we find ourselves in a position where patent law institutions huddle together seeking content-free legitimacy in mere uniformity.” I do not consider that the precepts of patent law are intrinsically any more arcane than other fields of law such as tort or contract. The problem is that generalist lawyers have not spent anywhere near as much time and effort grappling with patent law as they have with the other fields of law that they have come to feel familiarity with. So naturally they find it confusing, as no doubt they found the concept of estoppel when they first encountered it. But then they blame the law, not their own lack of understanding.

WIPS (Worldwide Intellectual Property Service) – IPR Solution experts

SpicyIP is happy to bring to our readers news of a wonderful set of search and analytics tool by Worldwide Intellectual Property Service (WIPS) for those involved in the IP field. Please see as below:

WIPS (Worldwide Intellectual Property Service) – IPR Solution experts

Description:

WIPS, as a leader in the intellectual property fields, is endeavoring to provide various solutions for which clients may have difficulty in IP related issues.

WIPS is Korea’s first company to offer online worldwide patent information service. Since starting the business in 1999, the service is being used by over 3,000 companies, patent law firms, academics, governments and R&D centers.

WIPS has approximately 130 million cases of worldwide patents. These cases are used to search patents and large amount of data up to 10,000 cases can be analyzed up to four levels. It is considered as a user-friendly UI that considers the convenience of users and exclusive analyzing functions enable various works on the web including patent search and analysis of technology and related facts.

WIPS has been awarded by KIPO (Korean Intellectual property Organization and WIPO (Worldwide Intellectual property Organization). It has also received Quality Certification in Patent Information Database.        

 

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It is a worldwide patent online service introduced by WIPS. WIPS global advanced (WGA) is easy and quick to provide services about deep analysis on major patents, intensified Smart Angle on analysis of multiple statistics and specialized theme search service based on business purpose.

With WGA, users easily Search and Analyze Patent Family, Citation, IP Portfolio on Competitors, and etc.
It offers various search and analysis functions such as Patent Family, Citation, and Company searches on major patents worldwide. Database coverage includes US, Europe, Japan, Korea, China, and bibliographic information of many other countries like India, Taiwan, UK, Germany, etc.

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ThinKlear is a Software Tool for editing and analyzing patent information. It is linked with WIPS Global Advanced and can be used by various ways; such as, analyzing patent information and making a report for it.

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The curious case of medical method patent: Can doctors patent surgical procedures?

Around a month ago, the Times of India reported that a Satara-based Gynaecologist Dr.R. S.Katkar had received a patent for microsurgical recanalisation operation. This story made us do a double take! Did the patent office err and grant a medical method patent or was it a case of misreporting by the Times of India? Well, we did a little bit of research on this and turns out that the patent application had just been published in the patent office journal as 698/MUM/2013. We contacted the inventor Dr.Katkar, and were astonished to find that he was blissfully unaware of the fact that a published patent application is not the same as a granted one and that it takes at least a year or two (often times more) to get a patent. Even more surprising was the fact that he had no clue that methods of treatment were not patentable under Indian patent law [Section 3(i)] .Apparently, his patent agent through whom he filed the application never informed him of any such prohibition. 

In the TOI article, Dr. Katkar has been quoted as saying “The success rate of microsurgical recanalisation of fallopian tubes is 80% in developed countries. I studied the reasons for 20% failure rate and developed one unique technique to minimize this. The patent has been awarded for this modified procedure.” 

Patent eligibility of medical method patents 

Section 3(i) of the Indian patents act precludes medical method patents from the scope of patent eligible subject matter because they compromise patients’ rights by limiting access to inexpensive treatments and also restrict practitioner’s freedom. Section 3(i) states “Any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products is not an invention.” Any operation on the body which requires the skill and expertise of a surgeon, any therapy or diagnosis practiced on a living human or animal body are excluded from the scope of patentability under Section 3(i).

Unscrupulous patent agents 

The patent application and prosecution procedure in India is lengthy, not to mention complicated. For a patent application to advance to issuance stage several criteria should be met. Firstly the subject matter should be patent eligible (section 3). Additionally a comprehensive prior art search must be conducted to determine state of art and the invention should be novel and possess inventive step over the existing art. Then there is this enablement requirement, claim construction so on and so forth. One has to have a clear understanding of the nuances of the invention and intricacies of the laws. Obviously this is an overwhelming amount of information for an inventor to grasp, understand and comply within a short period of time. So hiring a patent agent/attorney becomes essential. This is an expensive exercise and sometimes inventors are taken for a ride by unscrupulous agents. 

In this case, Dr.Katkar informed us that a patent agent a certain Mr.Bhavesh had charged Rs.70, 000 for drafting the patent application alone!! A search at the electronic register of Indian patent agents reveals that there is no agent registered by this name. Section 129 of Indian patents act clearly states “No person either alone or in partnership with any other person, shall practise, describe or hold himself out as a patent agent, or permit himself to be so described or held out, unless he is registered as a patent agent or, as the case may be, unless he and all his partners are so registered.” This particular person (Mr.Bhavesh) posing as a patent agent, not only did he charge an exorbitant amount but he also failed to provide sound advice regarding patentability of the invention. Incredible! 

Empowerment of Independent inventors 

The national innovation foundation (NIF) and affiliated organizations have wonderful cost effective initiatives to help and advice grassroot innovators throughout the process of filing and commercializing the invention Anubha had blogged about this here.

The patent facilitating center(PFC) a wing of TIFAC,department of science and technology, Govt of India provides techno-legal as well as financial support for securing patents and post issuance support. However this support is restricted to innovations funded by Indian universities/governmental agency. 

On the international platform USPTO has a specialized cell dedicated to independent inventors. This cell has various tools and provides inventors access to a wide array of resources. Inventors are strongly encouraged to file patent applications on their own behalf (pro se). Else the USPTO along with several IP law associations has designed pro-bono programs to assist financially under resourced independent inventors so that no worthy invention is left undiscovered. 

In India more such initiatives are needed to assist independent inventors in patent filings, to increase awareness among inventors and improve the overall innovation ecosystem. 

Guest Post: A response to the IPKat's "despair" by Siva Thambisetty

Image from here

It appears that Darren's guest post has got the ball rolling with not only a healthy debate in the comments section to his post but also in the form of this guest post in response by Siva Thambisetty. Siva is an alumna of the National Law School of India University (NLSIU) and the University of Oxford. She is currently a lecturer in law at the London School of Economics (LSE), where she teaches and writes on patent law, innovation and legal institutions. She contributes to India@LSE. Follow her on @sivathambisetty  

Novartis vs UOI: Against Elastic claims

& why Specialisation May Still be for Insects

By

Siva Thambisetty

I was really stimulated by Darren Smyth’s post on the Indian Supreme Court’s decision on Novartis, since I also wrestled with this part of the court’s logic but resolved it very differently. I have also read the same author’s expressive post on IPKAT. The primary claim in both blog posts is that the Novartis decision conflates infringement, with disclosure that anticipates novelty. It’s a complex and important decision and here is how I see it at the moment:

The comparison the court is in effect making is not between infringement and anticipatory disclosure, but between sufficiency of disclosure and anticipatory disclosures both of which have to be enabling. If there is a failing in logic it is that they do not make more of ‘sufficiency’ when analyzing the significance of claim construction in the infringement action for anticipatory disclosure.

I quote from the decision: “Under the scheme of patent, a monopoly is granted to a private individual in exchange of the invention being made public so that, at the end of the patent term, the invention may belong to the people at large who may be benefited by it.”

The phrase ‘made public’ tells us that the court is implicitly relying on Novartis’ claims in UK courts to assume that they had sufficiently disclosed Imatinib Mesylate, which therefore amounts to an enabling disclosure that anticipates a future patent application. In terms of evolving jurisprudence, the UK has taken care to whittle down the breadth of claims using sufficiency as a principle; and courts here would hardly countenance effectively using two standards of disclosure – one for sufficiency and one for novelty.  It is precisely to avoid such situations that infringement and validity are addressed together in UK courts.

The present invention is fairly straightforward – it is not a complicated genus of compounds that may be claimed on broad functional terms, that could give rise to confusion about what exactly is claimed and covered. In other words there may be cases where a patent specification is not required to enable an invention that arose after the date of filing of the application, but these are rare cases, and coverage may yet be constrained by the limited application of purposive construction in the UK.

Novartis did not do themselves any favors by using US precedent in Hogan – a case that explicitly approved ‘broad claims’ and implicitly, Kitch’s prospect theory  (where early and broad disclosures are thought to stimulate innovation (see the Adams paper). Citation of Hogan was a poor choice given that its impact was virtually eliminated in subsequent cases. “Notably Since Chiron, the Federal Circuit has not referred to Hogan in any of its cases that involved claims to a genus where only a single species was enabled.” [Chiron Corp. v. Genentech, Inc F.3d 1247, 1257 (Fed. Cir. 2004)]

The point about not extending this logic to the beta crystalline form, I suggest is because the court is not at that stage in a position to judge whether the beta crystalline form incorporates an ‘additional advantage or technical effect’ and is therefore not sufficiently disclosed, by an application that discloses Imatinib Mesylate. (The court may have taken the position that the beta crystalline form is implicitly disclosed I agree, based on common general knowledge of polymorphs). To equate disclosure of Imatinib Mesylate with anticipation of the beta crystalline form would be to assume that there is no significant difference between the two forms – the very matter the court had set out to decide in the first place.

Finally, I agree that a patent application can under some circumstances be infringed by something not disclosed in the claims. I do not agree however, that you can effectively use two standards of disclosure – one for sufficiency, and a different one for novelty. And I suggest it is this that is at the heart of the ‘fallacy’ that Darren is trying to point out.

I would urge those following Darren’s posts to read in particular paragraphs 140-157 of the decision. The court is at great pains to show that they are not willing to countenance ‘elastic’ claims which has a narrow meaning in the case of validity but a wide meaning in infringement (quoting from Terrell no less). Also see Charles Adams ‘Allocating Patent Rights Between Earlier and Later Inventions’ which explains why use of Hogan under the circumstances was so obviously poor legal strategy on the part of Novartis.

I have a related comment to make on the IPKAT’s despair at senior non-specialist courts, in this case the Indian Supreme Court. Patent lawyers live in a bizarre world where we are used to inverted categories of thought that makes little sense to external observers. Other lawyers, even other IP lawyers, often struggle to understand the pretzel shaped law that we have come to take for granted here. So we find ourselves in a position where patent law institutions huddle together seeking content-free legitimacy in mere uniformity. Mimicking related jurisdictions has in itself become a test of legitimacy.

This is where generalist appellate courts can make a difference as they are not as severely subject to the categories of thought we have been socialized to accept. Take the European Court of Justices decision in Monsanto vs Cefetra for instance – relying on Art 9 of the biotechnology directive to reject infringement and restrict the scope of the gene patent to only those cases where the gene is actually expressed – is extraordinary when compared to the sort of strict liability we are used to in the case of chemical products, but perfectly legitimate from a purposive interpretation point of view. Likewise, the Indian Supreme Court’s approach with respect to parity between what is claimed and what has been disclosed is well supported by material cited.

This is not to say that there aren’t troubling aspects of the decision. I find the lack of categorical clarity about patent eligibility and patentability, worrying. (S 3 of the Indian Patents Act in its entirety makes me long for the relative simpliclity of S 1(2) of the UK patents act in comparison!). The difference between eligibility and patentability is the difference between justifying property rights in the first place and explaining why a particular subject matter should be denied patent protection (on grounds of not being inventive or being inadequately disclosed, for instance). The former is a vehicle for substantive reasoning, the latter for the instrumental rationality of the person skilled in the art. The framing problem with S 3(d) is that it draws the person skilled in the art into the question ‘what is an invention?’. This collapse bears the hallmarks of the disastrous ‘technical contribution’ test in the context of computer-implemented inventions in Europe the perils of which are at least partly explained in Aerotel.

I am working on a longer piece on these and other issues and look forward to further discussion. I also contribute to India@LSE - see here and here for other directly relevant posts from LSE’s India pages.  

Javed Akhtar nominated for CISAC Vice-Presidency

CISAC, the International Confederation of Societies of Authors and Composers is a non-governmental, non-profit organisation that works for increased recognition and protection of the rights of creators.  The Board of Directors of CISAC have unanimously recommended  French electronic music pioneer Jean-Michel Jarre and Indian scriptwriter, poet and lyricist Javed Akhtar as their candidates for the Presidency and Vice-Presidency of CISAC. These recommendations have been made by the Board of Directors to the General Assembly which is scheduled to meet in Washington on June 6. This is the first time that the Board of Directors have recommended candidates to the General Assembly.

Javed Akhtar, was chosen as a candidate for the Vice-Presidency as a recognition of his exceptional efforts with respect to the passing of the Copyright Amendments and his "infatigible advocacy of creator rights". If confirmed by the General Assembly, Mr. Akhtar will not only be the first person from Asia to be elevated to the post of Vice-President of CISAC but will also be a representative of the interests of three million creators spread over 121 countries. As Vice-President of CISAC, Mr. Akhtar would be expected to mobilize and lobby for the rights of creators with various governments as well as in the international fora.

Mr. Akhtar is also one of the speakers at the World Creators' Summit which is scheduled from June 4-5 in Washington. The World Creators' Summit, organised by CISAC,  is the leading international forum for discussion and debates on the future of copyright, role of creators, value of creative works and collective management of authors' rights. At the Summit, Mr, Akhtar will be participating in a high level panel discussion on "What Public Policies for Arts" with other eminent panelists such as Susana Baca [Singer and Songwriter, former Minister of Culture (Peru)], Ana de Hollanda, [Singer and Songwriter, former Minister of Culture (Brazil)],Maka Kotto, [Author, Actor and Stage Director / Minister of Culture and Communications, Quebec (Canada)] and Congressman Jerold Nadler, [United States House of Representatives (USA)].

Guest Post: A quick update on Viacom v. YouTube

On April 18, 2013 a U.S. District Court delivered Google yet another victory in its long running litigation against Viacom over the alleged copyright infringement caused by You-Tube. We have below for our readers an excellent summary of the judgement by Chaitanya from the Stanford Law School, who has previously blogged for us over here and here. 

A quick update on Viacom v. YouTube

by

Chaitanya Ramachandran

Image from here

In what is being hailed an a victory for operators of UGC (user-generated content) websites, Judge Louis Stanton of the US District Court for the Southern District of New York recently ruled (opinion available here) in favour of YouTube in the latest round of the long-running Viacom v. YouTube saga. This is Viacom’s second loss in the District Court, following the Court of Appeals for the Second Circuit’s partial reversal and remand (available here) of Judge Stanton’s 2010 grant of summary judgment in favour of YouTube (which we blogged about here).

In his 2010 opinion, Judge Stanton found that the DMCA safe harbour for copyright infringement applied despite YouTube’s general knowledge that users were uploading infringing content, because Viacom couldn’t prove that YouTube had specific knowledge about which clips were infringing. On appeal, the Second Circuit remanded the case to the District Court on the ground that a reasonable jury might have found that YouTube had specific knowledge. On remand, Judge Stanton has again granted summary judgment to YouTube, finding that Viacom had not established either specific knowledge or willful blindness on YouTube’s part (I’ll explain why this is significant shortly).

The District Court decisions seem to be correct; the fundamental compromise achieved by the DMCA safe harbour was that UGC websites would not be required to actively police their services for infringing content as long as they responded swiftly to takedown notices from copyright owners. Viacom’s submissions would defeat this arrangement by reversing the implicit burden of proof – instead of being presumed innocent in the absence of proof of specific knowledge or a “red flag” notice, Viacom wanted YouTube to be presumed guilty in the absence of proof that it did not know the content was infringing. Viacom may have scored an own goal by admitting that it did not have evidence that would “allow a clip-by-clip assessment of actual knowledge”, and it was on the basis of this admission that Judge Stanton (correctly) rejected Viacom’s argument.

But the legal issue that is key to this case is the determination of the standard of scienter required by the DMCA, as the Second Circuit had held on appeal that a showing of “willful blindness” might be an acceptable substitute for a showing of specific knowledge. Judge Stanton artfully evaded applying this standard by deciding that even a showing of “willful blindness” should specifically relate to the infringement of the clips being litigated, thereby effectively applying the statutory standard of specific knowledge. (Note: The statute denies safe harbour protection to websites that are aware of “facts or circumstances from which infringing activity is apparent”, but “willful blindness” seems to be broader than this.)

Even so, Eric Goldman, in an incisive blog post, disapproves of the standard applied by Judge Stanton – to forfeit the safe harbour, the defendant must “influence or participate in the infringement” – as neither term is present in the statute. The objection is that judicial interpretation of the DMCA safe harbours is unnecessarily beginning to add layers of complexity to the statutory language and creating uncertainty about the applicability of the safe harbour. I agree with this observation; while correctly rejecting Viacom’s call for a loosening of the specific knowledge standard, Judge Stanton went too far in the opposite direction by holding that only evidence of affirmative acts by YouTube could establish that it had specific knowledge. I think this muddles the DMCA safe harbour by introducing an element of contributory liability, which is absent from the statute. This point is likely to come up on (the inevitable) appeal.

What is quite incredible about this seemingly never-ending saga is that it relates only to clips uploaded to YouTube before 2008, which is when YouTube implemented its ContentID screening system. It has been five years since then, and in the face of repeated setbacks, it isn’t clear what Viacom is trying to achieve by keeping this case alive. Wouldn’t it make more sense for Viacom to let bygones be bygones and instead be more diligent with its DMCA takedown notices in the future? 

Guest post: Avoiding Open Source Surprises When Buying Proprietary Software

We're happy to bring to our readers a brief note by Protecode on protecting against the risks of Open Source Software being incorporated in purchased proprietary software without the knowledge of the buyer. 

A bit about the authors: Mahshad Koohgoli, CEO of Protecode, has more than 25 years of experience in the technology industry. Previously, he was founder and CEO of Nimcat Networks (acquired by Avaya in 2005) and founder of Spacebridge Networks and Lantern Communications Canada. Mahshad has a BSc and a PhD from the University of Sussex, England. Diana Marina Cooper has been working with Protecode as an open source corporate strategy consultant since 2011. She obtained a BA in Politics and Governance and an MA in Globalization Studies. She is currently a JD Candidate (2013), and is pursuing a concentration in Law and Technology.

Introduction

Open source software (OSS) has probably been the biggest driver of complex software solutions in the last decade. Access to a large variety of quality, peer-reviewed software has accelerated product development, reduced product introduction intervals and lowered the costs for producers of software and for those of us who leverage third party software in our projects.

Although OSS is generally free in the monetary sense, usage of OSS is subject to obligations spelled out in a license. There have been a number of legal cases in North America and Europe with companies using OSS improperly in their products. The problems arise regardless of where software has been developed. This includes software that is developed for final shipment to a client in North America or Europe as is the case with many suppliers in India. You may think that your organization is safe because you are buying proprietary software. However, if your software supplier unknowingly incorporated OSS into its product, you are still liable for infringement of OSS license obligations.

The good news is that there are various tools available at your disposal that can assist your organization in protecting itself from such open source surprises. These include:

• Contractual measures such as representations and warranties and indemnities; and

• Extra-contractual tools such as software audits and a structured Open Source Software Adoption Process (OSSAP).

The following is a brief review of both contractual measures and due diligence tools available to

parties engaged in the software supply chain.

Contractual Measures

Commercial contracts include various provisions that protect and allocate risk among the buying and selling parties. Among the most important are representations and warranties (“reps and warranties”) and indemnities. Reps and warranties are assurances made by one party that are intended to provide certainty to the other party that relies on them. However, in many instances it is impossible for contracting parties to fully guarantee the accuracy of a statement. In these cases, parties opt to provide reps and warranties that are qualified by the knowledge of the party providing them, and can be problematic from the perspective of the party that seeks to rely on them. Indemnities provide security against losses that are triggered by the occurrence of contractually specified events. Unlike reps and warranties, recovery from indemnities is not contingent upon whether a misrepresentation was made.

Reps and warranties vs. indemnities in an open source world

In the software procurement context, it is important for buyers to determine whether open source code is incorporated into the software that is being purchased. The primary reason for this is that open source license obligations are binding. Additionally, if a buyer purchases  software without the knowledge that it includes open source, the buyer runs the risk of commercializing the product in a manner that violates the license that covers the open source code.

Because of the implications of intellectual property infringement suits, a software buyer will often require its supplier to represent and warrant that the software being purchased does not contain any, or specific type of, open source code. However, as we mentioned earlier, it is often difficult for contracting parties to fully attest to the accuracy of a representation. This situation arises in instances in which the contracting party experiences knowledge gaps. In these cases, a contracting party will seek to limit its liability by narrowing the representation to apply to the knowledge that it possesses.

Software audit can minimize exposure

Rather than taking the risk of open source surprises, software purchasers can engage resources (internal or external) that have the ability to analyze software to determine the presence of open source prior to executing the purchase. Reps and warranties and indemnities should not be regarded as due diligence replacements. Although open source reps and warranties and indemnities can provide software purchasers with remedies for losses arising from intellectual property infringement suits, they cannot shelter the buyer from being sued in the first place, or from experiencing the loss of goodwill in relation to litigation.

A software audit always entails machine-assisted code scanning aimed at detecting third party and open source code. An expert reviews and signs-off on the machine-generated reports and provides the purchaser with an audit report detailing the identified code and associated license obligations. The audit process can take anything between a day to a couple of weeks depending on the size and complexity of the software. Performing such audits at the pre-purchase stage allows the buyer to understand whether the license obligations of the open source code are in line with the intellectual property policies of its organization, and if not, then the buyer is positioned to request the supplier to replace the code in question, or to engage an alternate supplier.

One of the contexts in which software audits are particularly beneficial is in the supply chain. As an example, shortly after Cisco acquired Linksys in 2003, it was faced with an infringement suit relating to the use of GPL covered chip-driver code in its router firmware. It turned out that the infringing chipset was provided to Linksys by Broadcom, which in turn outsourced the development of the driver to a third party. As a part of the settlement that was reached, Cisco was forced to make the infringing source code freely available on its website, appoint an open source compliance officer, and make a monetary contribution to the Free Software Foundation. Shortly afterwards, Cisco removed the product from its portfolio. As the Cisco case suggests, software audits can be a helpful tool at the pre-purchase stage when dealing with a supply chain context in which the immediate supplier has little control or knowledge over the code pedigree of the final product.

Review of available contractual tools

Software purchasers have contractual tools (reps and warranties, and indemnities) at their disposal to protect their organizations from open source liabilities, however it is important to remember that not all tools provide equal protection. While reps and warranties can provide the buyer with a remedy against misrepresentation, in instances where these assurances are qualified by the knowledge of the supplier, the buyer may be left without recourse. From this perspective, indemnities offer increased protection to software purchasers concerned about intellectual property infringement claims in relation to the use of open source.

Open source indemnities are also beneficial in comparison with reps and warranties, as they do not impose an obligation upon the party relying on them to take any action to minimize their own losses in the event of a breach.

Although open source reps and warranties and indemnities can provide software purchasers with means of recovery from intellectual property infringement claims, these contractual measures provide for an imperfect after-the-fact solution to a problem that lends itself well to management practices that would reduce the risk in the first place. Structured open source license management practices such as Open Source Software Adoption Process (OSSAP), and software audits aimed at identifying third party and open source code and ensuring open source compliance, provide an optimal level of protection. These tools provide certainty regarding code pedigree, and enable software purchasers to avoid the negative consequences arising from intellectual property infringement suits.

Guest Post: The IPKat's "despair" with the Supreme Court's judgement in the Novartis-Glivec case

Last week, I read this highly critical post by Darren Smyth, on the fantastic IPKat blog, where he takes apart  some of the analysis in the Supreme Court's judgement denying Novartis a patent for Glivec. Darren's analysis had very accurately identified a significant flaw in the judgement and let's just say that he doesn't mince his words when he takes to the pen or the keyboard. Since we have had almost no critical commentary on the judgement so far, I invited him to write us a guest post on the issue. 

I do hope, some of our other readers send in such guest posts, there are a lot of problematic portions in the Novartis judgement of the Supreme Court and I understand that not many in India want to be seen criticizing the judgement but honest academic criticism never really hurt anybody. 

First a little bio about Darren: Darren Smyth is a UK and European patent attorney, specialising in chemical subject matter, particularly in the fields of food products and pharmaceuticals. He is a partner in the intellectual property law firm EIP and head of the chemistry practice EIP Elements. He contributes to the IPKat weblog, and also maintains a personal blog the IP Alchemist (www.ipalchemist.com). He holds an MA in Chemistry and DPhil from Oxford University, and conducted research at the Tokyo Institute of Technology before entering the patent profession.

More on concerns about Glivec

by Darren Smyth

Darren Smyth

Last week, I posted on the IPKat a piece that identified significant deficiencies in the decision of the Indian Supreme Court in the Glivec case.  At the kind request of the Spicy IP team, I would now like to amplify that post.  In particular, the IPKat post was directed towards a readership that would (I believed) immediately appreciate wherein lies the error in reasoning, once it was pointed out.  But perhaps the fallacy in the logic requires greater exposition.

I cannot emphasise enough that I am NOT talking about the part of the decision that refers to Section 3(d).  Nor am I particularly criticising the outcome of the decision – the refusal of the patent application – I don’t agree with it, but neither do I consider it particularly heinous.  The novelty analysis is however a dreadful piece of jurisprudence, and should not be allowed to escape criticism merely because it lies in an early part of the analysis.

What the Supreme Court did was to confuse the examination of whether a patent is infringed with the examination of what that patent, as a document, discloses.

To determine whether a patent is infringed, the comparison that is conducted is whether the alleged infringement reproduces all of the features of the claims (specifically, of the broadest independent claim).  If those features are reproduced in the alleged infringement, then it infringes.  But it is important to appreciate that this applies irrespective of what additional features the infringement may have.

So if the claim is to “imatinib or salt thereof”, then this is infringed by imatinib, or any salt (including the mesylate), in any physical form such as amorphous or crystalline, in combination with any other pharmaceutical, or any excipient, in any dosage form or packaging or whatever.

On the other hand, to determine whether the same patent document as a prior art document anticipates a later patent application, the comparison is of the claims of the later application with the disclosure of the prior document.  If the prior document discloses all of the features of the claims of the later application, then the later application lacks novelty.

It requires a little careful thought, but it is not difficult to see from the foregoing that a patent can be infringed by something that it does not disclose.  For example, the earlier patent that claims “imatinib or salt thereof” would be infringed by a combination pill containing imatinib with another pharmaceutical, even if it had no disclosure of any such combination.  But if it had no such disclosure, it would not anticipate a later patent application with claims directed towards the combination of imatinib and another specific pharmaceutical.  (I am not necessarily saying that such a combination would be patentable – it might not involve an inventive step, or it may not be allowable under Section 3(e) of the Indian Patents Act, but it would be new).

This distinction comes from the logic of what is being compared with what:  the features of the infringement with the claims of the prior patent in the first case, and the claims of the later patent application with the disclosure of the prior patent in the second case.  It does not rely on any particular national law regarding novelty or patentability and is therefore, I suggest, universal.

But what the Indian Supreme Court did was to say [see paras 125 - 126 of the judgment; Novartis counter-arguments at 134-138, and their dismissal at 139 - 157] that because Novartis had alleged, in relation to the UK designation of the corresponding European patent, that their prior patent was infringed by imatinib mesylate (by the marketing in the UK by NATCO Pharma of a drug called VEENAT 100 containing imatinib mesylate as the active ingredient), therefore that patent disclosed imatinib mesylate.  The Supreme Court thereby committed a basic category error of the variety frequently encountered in first year trainee patent attorneys.  (The criticisms in the judgment of Novartis in relation to referring to the patent in the application for US regulatory approval for imatinib mesylate, and obtaining a US patent term extension for the patent [see paras 115-122 of the judgment], commit the same category error so for simplicity I shall refer only to the infringement one). 

I shall reproduce again one paragraph [156] of the judgment:

“However, …. , we would like to say that in this country the law of patent, after the introduction of product patent for all kinds of substances in the patent regime, is in its infancy. We certainly do not wish the law of patent in this country to develop on lines where there may be a vast gap between the coverage and the disclosure under the patent; where the scope of the patent is determined not on the intrinsic worth of the invention but by the artful drafting of its claims by skilful lawyers, and where patents are traded as a commodity not for production and marketing of the patented products but to search for someone who may be sued for infringement of the patent.”

I suspect that some readers may take issue with my analysis and say “Just because the law of other countries distinguishes between the scope of a patent for the purposes of infringement and its disclosure for the purposes of prior art, it does not follow that Indian law must do so.”  This is the view reflected in the quoted paragraph above.  But it is not a question of any particular legal theory, it is a matter of logic.  It is actually not logically possible to conflate infringement and disclosure, because the comparison being made in each case is not the same.  Put another way, the advancement of knowledge is always made within earlier generic knowledge, so if this view were taken of novelty, then nothing would ever be new.

And actually the Indian Supreme Court implicitly recognised the error of their logic, because they only applied it halfway.  They found the mesylate to lack novelty because it infringed the earlier patent, but they balked at the logical next step, of finding that the beta crystalline form, which would certainly also infringe the patent, also lacking in novelty.  The Supreme Court took the beta crystalline form to be new [158].  If the conflation of infringement and disclosure tests is valid, then in fact not only the mesylate but also any specific crystalline form should lack novelty.  The fact that this did not happen shows that the Supreme Court actually in some manner realised the flaw in the logic.

Why does it matter?  Well, first of all it is essential that courts, particularly senior courts, apply the basic law correctly, because otherwise their utterances lack credibility.  Secondly, it is particularly important that novelty be correctly determined, because it is to the new subject matter that any subsequent patentability test (inventive step, Section 3(d) etc.) is applied.  So if the novelty foundation is defective, then the whole edifice of the judgment is liable to crumble.  The Supreme Court, based on this flawed novelty argument, insisted [171] that the comparison for Section 3(d) was between the amorphous (non-crystalline) and beta crystalline forms of imatinib mesylate, rather than, as Novartis probably correctly argued, the beta crystalline form of imatinib mesylate and the free base form imatinib.  If the novelty assessment had been conducted properly, perhaps the result would have been quite different.