Intellectual Property Matters Newsletter – September 2013
Print newsletter12/09/2013

“Pay for delay”, privity and Lundbeck
The pharmaceuticals giant, Lundbeck, has been the subject of two important decisions in recent weeks […]
The pharmaceuticals giant, Lundbeck, has been the subject of two important decisions in recent weeks – the first concerning the practice of pharmaceuticals companies seeking to prevent or delay the entry onto the market of generic competitors and the second relating to privity of interest in a patent dispute.
“Pay for delay”
The European Commission (the Commission) has been investigating perceived anti-competitive practices in the pharmaceuticals sector. The Commission launched an inquiry into the sector in January 2008, publishing its final report in July 2009. The final report found that the market was not functioning as it should, and that these deficiencies could largely be attributed to delays in the entry of generic medicines to the market. In particular, the Commission concluded that originator drug companies were using a number of methods to extend the commercial life of their medicines and to prevent or delay the entry of generics. The Commission has been monitoring patent settlement agreements, reflecting its concern that such agreements are being used as a means to delay the entry of generic products onto the market and thus to extend artificially the patent-holder’s monopoly.
The Commission alleged that Lundbeck concluded agreements with generic competitors to prevent the market entry of generic versions of its antidepressant drug citalopram, following the expiry of its patents relating to the drug itself. Essentially the Commission claimed that Lundbeck paid substantial sums to the generic competitors in return for a delay in launching their generic products, so that the Lundbeck version of the drug would remain the only one on the market, despite the fact that the relevant patent was no longer in force. Following an investigation, the Commission decided on 19 June 2013 that, in 2002, Lundbeck and the generic competitors were guilty of entering into anti-competitive arrangements and fines of €93.8 million and €52.2 million were imposed upon Lundbeck and the other companies respectively.
The size of the fines is indicative of how seriously the issue of delaying generic competitors is regarded by the competition authorities, although we understand Lundbeck is planning an appeal, based on ongoing patent protection which it claims exists in relation to the production process used for the drug.
Privity of interest
In another case involving Lundbeck, this time in the English Courts [1], Lundbeck is the defendant in patent invalidity proceedings. Lundbeck had already faced a validity attack in respect of its patent in 2005 brought by a number of different pharmaceuticals companies, including a company called Arrow. The Claimant in the present case, Resolution, had belonged to the same group as Arrow but when it became independent it launched its own invalidity proceedings. At first instance Arnold J held that Resolution could proceed with its challenge because it had no interest itself in the patent in 2005. Lundbeck argued essentially that Arrow had argued its case on behalf of Resolution and therefore Resolution was bound by the 2005 decision – in other words there was a “privity of interest” between Arrow and Resolution.
In upholding Arnold J’s decision, the Court of Appeal explained that while the subject matter in the instant proceedings was the same as in 2005 there was insufficient degree of identity between the parties to the 2005 litigation and Resolution so as to bar Resolution from beginning a fresh action. Whilst Arrow and Resolution had been under common control, there had been no subsisting relationship between the two parties from which it could be inferred that Arrow was conducting the 2005 litigation on behalf of Resolution.
The judgment is helpful to any party seeking to re-litigate a patent in circumstances where it was a member of the same group of companies as an earlier litigant – this will not, of itself, operate to preclude re-litigation.
Postscript: Permission to admit experimental evidence
Matters did not end there for Lundbeck. In the same litigation involving Resolution, the High Court gave judgment on 30 July 2013 on Resolution’s application for permission to admit experimental evidence in its claim. Resolution had provided Lundbeck with a notice of experiments and invited certain admissions by Lundbeck. Lundbeck’s response left Resolution unsure as to what case it had to meet at trial and, accordingly, Resolution conducted a second set of experiments. It was those revised experiments that it now sought to adduce, with Lundbeck resisting the application on the basis that it needed the opportunity to take instructions on the differences between the procedures used in the two sets of experiments.
In granting Resolution’s application, Norris J considered that the differences between the procedures were not so significant as to prompt the conclusion that the second set of experiments should not be admitted. As the trial was expedited, it was appropriate to take a preliminary decision on the basis that the experiments were to be admitted at trial. Lundbeck was given the opportunity to review whether it could challenge the probative value of the experiments after it had taken instructions, and provision was made for it to apply to object to the experiments being admitted in that event.
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[1] Resolution Chemicals Ltd v H Lundbeck A/S [2013] EWCA Civ 924

Community registered designs and prior disclosure
A recent High Court judgment provides useful guidance on when a prior disclosure of a […]
A recent High Court judgment provides useful guidance on when a prior disclosure of a design, which is subsequently improved and only then registered as a Community registered design, may invalidate the registration.
The case of Magmatic Ltd v PMS International Ltd [1] is another illustration of the benefits of registering a design under the Community Designs Regulation [2].
In order to be capable of registration under the Community Designs Regulation, the design must be “new” and have “individual character”. It will have individual character if the overall impression it 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 filing or priority date of the design for which protection is sought.
Disclosure of a design prior to an application may therefore cause the application to fail. Under Article 7 of the Community Designs Regulation, a design will be deemed to have been disclosed, i.e. made available to the public, if, among other things, it is exhibited or used in trade before the date of the filing of the application, except where these events could not reasonably have become known, in the normal course of business, to the circles specialised in the sector concerned operating within the EU.
The claimant, Magmatic, manufactured and sold a child’s ride-on suitcase under the trade mark “Trunki”. The antecedents for the Trunki design went back to 1998 when Magmatic’s founder, a Mr Law, won a design award for his ride-on suitcase (called “Rodeo”). He continued to develop the design and applied for a UK registered design in 2002 (which has since lapsed) and a Community registered design in 2003. The design of the product, now sold under licence and by Magmatic itself, continued to be refined.
The defendant, PMS, was a distributor of a competing product – the “Kiddee” case. Magmatic claimed that Kiddee design infringed its registered design. PMS argued that the registered design upon which the claim was based was invalid because of the earlier disclosure of the Rodeo design. Magmatic however asserted that the disclosure at the 1998 awards ceremony of the Rodeo design did not count as a relevant disclosure in that, by way of the awards nomination and ceremony process, the “Rodeo” design would not reasonably have become known in the normal course of business to circles specialising in suitcases within the EU as a result of the award ceremony. This defence is known as the ‘obscure disclosures’ defence.
The High Court rejected Magmatic’s ‘obscure disclosures’ defence, noting that the award was well-known in the industry and people associated with the luggage trade would have seen the Rodeo design.
It was therefore necessary to consider the impression on the informed user of the designs of the original Rodeo design and the later Trunki design, to establish whether the earlier Rodeo design which had been disclosed meant that the Trunki registered design was invalid. Such an informed user, the Court concluded, would appreciate both similarities and differences between the two but would also conclude that the latter was considerably more sophisticated. The differences were sufficient to defeat PMS’s invalidity argument, and the Court turned to the infringement claim.
On the question of infringement, the judge (Arnold J) did not consider that the Rodeo design formed part of the design corpus of which the informed user would have been aware because of its relative obscurity. The Trunki design differed markedly from the existing design corpus. As the Trunki design represented a substantial departure from the design corpus and the designer had considerable design freedom, it was entitled to a broad scope of protection. In other words, more latitude is granted to designs that differ markedly from previous designs to those that do not.
The judge then went on to look at the Kiddee design and whether it infringed the Trunki registered design and concluded that, despite some differences, the overall impression it created was similar. It therefore did infringe Magmatic’s registered design right.
Comment
The novel aspect of the case concerned the “obscure disclosures” exception, which has not been a subject to have troubled the courts to date. Arnold J stated that the burden was on the party relying on the exception, in this case Magmatic, and the question was whether the Rodeo design could not reasonably have become known in the normal course of business to circles specialising in suitcases within the EU as a result of the award ceremony. It is also noteworthy that, whilst accepting that the Rodeo design was a prior disclosure, Arnold J did not consider it to form part of the existing design corpus – the latter constitutes only those designs with which an informed user is likely to be familiar.
[1] [2013] EWHC 1925 (Pat)
[2] 6/2000/EC

Copyright Hub – what is it and what will it do?
As part of the Government’s ongoing initiative to modernise the way we perceive and deal […]
As part of the Government’s ongoing initiative to modernise the way we perceive and deal in copyright works in the UK, it recently released a beta version of the Copyright Hub, an online portal where users can upload or search against copyright works facilitating easier licensing and consumer interaction.
“The Copyright Hub is your gateway to information about copyright in the UK. It points you in the right direction whether you want to learn about copyright, get permission to use somebody else’s work or find out about protecting your work.” (http://www.copyrighthub.org/)
The Copyright Hub has evolved from the seminal review conducted by Professor Hargreaves on copyright in the UK for a digital age. Amongst other conclusions, Professor Hargreaves was critical of access to copyright works and the difficulties that consumers often encounter in locating and identifying copyright owners. Following the review, it was recommended by the Government that a not-for-profit, industry-led, copyright hub be established.
The purpose of the Copyright Hub is to act as an informative resource for users to learn about copyright as well as to provide easy access for consumers to owners and licensing bodies of copyright works from where they can gain permission to use the works. The Copyright Hub is currently in its infancy and links to a limited number of copyright licensing agencies only at this stage. It is intended that, if initial tests appear positive, more organisations and copyright owners will be added to the Hub in due course.
The Hub’s website contains three main areas:
- Find out about copyright: This section contains information about copyright generally, licensing, copyright organisations and the law, as well as information specifically for schools and young people.
- Get permission: Via the hub, users are provided with information about various copyright works including music, images, text, video and multimedia and how and from whom permission may be gained to access and use the work.
- Protect: Whilst the Hub recognises that copyright subsists automatically, it also provides users with information about “marking” their works and joining licensing bodies.
The Hub is overseen by the Copyright Hub Launch Group (CHLG) which is chaired by Richard Hooper CBE. Once completed it is hoped that the Hub will act as an accessible and central portal from where users can share and profit from their work.

Rihanna’s passing off claim against Topshop succeeds
The High Court has held that sales of T-shirts bearing a photograph of the popstar […]
The High Court has held that sales of T-shirts bearing a photograph of the popstar Rihanna, at Topshop, without her approval, constituted passing off.
The case [1] centred on the sale by Topshop of T-shirts bearing an image of the popstar Rihanna. Topshop had a licence from the photographer to use the image but did not have permission from Rihanna herself. Rihanna argued that the sales of the T-shirts without her consent constituted passing off. She maintained that the sales would be damaging to her goodwill, particularly given her associations with the fashion world.
The case was not about image rights – a concept not recognised in any distinct, free-standing way in English law – nor was it about privacy or about copyright. It was solely about passing off and the three elements needed to substantiate a claim for passing off, namely:
- a goodwill or reputation attached to the relevant goods or services
- a misrepresentation by the defendant to the public (whether or not intentional) leading, or likely to lead, the public to believe that the goods or services offered by him are those of the claimant
- damage to the claimant, arising from the erroneous belief that the source of the defendant’s goods or services is the same as those offered by the claimant.
Judgment in the case was given by His Honour Judge Birss QC. He referred to the High Court decision in Irvine v Talksport [2] in which it had been held that there was nothing in law to prevent a case of passing off being made out in a false endorsement case. This case was not a false endorsement case but a merchandising case, although the legal principles were the same in each case.
On the question of goodwill, the judge accepted that Rihanna was a “style icon”, who was associated with fashionable clothing. The judge also accepted that there was an overlap between the music and fashion industries and Rihanna had entered into agreements with Gucci and Armani regarding clothes promotion and an agreement to design clothing for River Island. In short, she had “ample goodwill to succeed in a passing off action of this kind”.
In order to establish misrepresentation it is necessary to show confusion as to trade origin – this was not the same thing as wanting simply to buy an image of the popstar. The judge considered that, to prospective purchasers, the nature of the image was a fairly strong suggestion that the product was authorised by Rihanna. Of particular importance was the public perception of links between Topshop and famous stars in general, and Rihanna in particular, which would enhance the likelihood of the public believing that the T-shirts were authorised by Rihanna.
Birss J accepted that the public will not always assume that the appearance of an image of a popstar on a garment necessarily means that the product is authorised, but in this case Topshop had made a concerted effort to associate themselves with Rihanna. For example, they had communicated to the public when the singer wore one of their items or visited one of their stores. In this particular case, the image had been taken from the video of Rihanna’s single, “We found love”, and could be assumed to be associated with the marketing campaign for that record. The assumption that the T-shirt was authorised by Rihanna would be part of what would motivate her fans to buy the product.
On the third element needed to succeed in a passing off claim – damage – the Judge stated that if a substantial number of purchasers were likely to buy the T-shirt under the false impression that it was authorised by Rihanna, then this would clearly be damaging to her goodwill as it constituted sales that were lost to her merchandising business and also amounted to a loss of control over her reputation in the fashion industry. It was immaterial that the garment was a high quality product as it was for Rihanna, not Topshop, to decide which garments she wanted to endorse.
Points to consider
As noted earlier there is in English law no free standing general concept of “image rights” protecting against the reproduction of a person’s image. However, the case does show that there may be an avenue available to celebrities to protect their image, through the long-established tort of passing off where an image from a film, video or other publicity shoot appears on a garment creating an expectation that is authorised promotional merchandise. It will not be available in every case but will depend on the facts of the particular case. As His Honour Judge Birss QC put it:
“The mere sale by a trader of a t-shirt bearing an image of a famous person is not, without more, an act of passing off. However, the sale of this image of this person on this garment by this shop in these circumstances is a different matter”.
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[1] Robyn Rihanna Fenty and others v Arcadia Group Brands Ltd (t/a Topshop) & Anor
[2] [2002] FSR 60

The price of success in the PCC – especially on a CFA
The very recent patent infringement case of Scopema SARL v Scot Seat Direct Limited [1] […]
The very recent patent infringement case of Scopema SARL v Scot Seat Direct Limited [1] has demonstrated just how ruthless can be the costs capping regime in the Patents County Court (PCC).
Background
The Claimant brought a claim for patent infringement against the Defendant. The end result at trial, which lasted only half a day, was that the Defendant succeeded in defending the claim by persuading the Court that its product did not infringe the Claimant’s patent. It had based its defence on three main non-infringement arguments. It only really succeeded in relation to one of those threads of argument – though of course this was sufficient for a finding of non-infringement.
The proceedings then moved to the consideration of costs and there was a separate hearing on the point. The Claimant admitted that the Defendant was the winner overall, and so in the usual course of things, the Claimant would have to pay the Defendant’s reasonable costs. However, this was the Patents County Court, so the recovery of costs was always going to be subject to the £50,000 cap (see, for example, here). In addition, given that a couple of the Defendant’s arguments had failed to persuade the trial judge, the Claimant sought a reduction on the amount of costs it would have to pay to the Defendant.
Costs specifics
The Judge was far from persuaded by the Claimant’s arguments as regards obtaining a reduction on the amount of costs it owed. Essentially, the Defendant had been forced to defend a claim which, in the end, had not been made out and therefore it should recover its costs. However, this being the PCC, the Defendant could not simply ‘submit a bill’; rather, the Defendant had to separate out its costs according to the PCC stages and the amount recoverable from the Claimant would be subject to the PCC caps.
The Defendant tried to maximise recovery in two main ways: (1) by putting time for the CMC into the separate ‘application’ stage, in an attempt to open up not only the CMC cap (£2,500) but also the application cap (£2,500), and (2) by seeking to recover money in relation to work done on investigating a possible counterclaim for invalidity of the Claimant’s patent, which in the end was not pursued. The Judge had no issue with (2) and granted the full cap available for a defence and counterclaim (£6,125), on the basis that it was entirely reasonable, faced with a patent infringement claim, for the Defendant to run validity searches. As regards (1), however, the Judge allowed recovery of only the CMC cap insofar as work done at or for the purposes of the CMC was concerned, i.e. despite the costs adding up to far more than £2,500, the Defendant could only seek this amount from the Claimant for that ‘stage’.
There was an added complication in respect of costs in this matter, due to the fact that the Defendant’s solicitors had entered into a conditional fee agreement (CFA) meaning that an uplift on the fees payable would apply upon a successful outcome, which, of course, had been achieved. In this case, the uplift applicable was 100 per cent, based on the risk of not achieving a successful outcome at the time the CFA was entered into. For perhaps obvious reasons, the Claimant objected to the CFA uplift being taken into account by the Judge in his costs award, and specifically objected to the size of the uplift, claiming that the risk assessment must have or should have changed later on, i.e. as the strength of the Defendant’s case became clear. However, the Judge decided it was entirely reasonable for the Defendant’s solicitors to enter into a CFA and to maintain that CFA to trial, even when it became ever clearer that the Claimant’s chances of succeeding were minimal (on the facts, there was a turning point at which it became more obvious that the Claimant’s case on infringement might fail). The Judge expressly stated, in fact, that in his view there is “no justification for saying that the parties to a CFA should be continually adjusting the relevant uplift according to their instantaneous perception of the chances of success. Unless a new CFA is entered into, the relevant date for consideration of the chances of success is the date at which the relevant agreement was entered into”. The Judge therefore awarded, in principle, the full uplift, that is, doubling the amounts owed to the Defendant by the Claimant.
However, as we know from the case of Jodie Henderson v All Around the World (described here), CFA uplifts do not mean that the PCC costs caps are automatically displaced. Therefore, while the Judge was willing to award the CFA uplift to the Defendant, this remained subject to the cap. For each stage, the Judge therefore doubled the amount awarded as base costs but the amount for each stage actually awarded was restricted to the cap figure.
The Defendant’s total costs, especially with the CFA uplift, would have been far higher than the £50,000 cap. Even its assessed costs (i.e. its costs after having been summarily assessed by the Judge and, in most places, reduced) were, with the uplift applied, in excess of the cap, at £52,990. However, as a result of the manner in which the caps are applied for each discrete stage, the Defendant was in total awarded £33,761.
Conclusion
The judgment demonstrates that in the PCC even a successful defendant, who has been forced to fight a claim (and is clearly justified in doing so), may end up recovering substantially less than even the £50,000 cap. Clients who choose to use the PCC for their IP disputes should be aware that the benefit of the costs regime is the certainty it offers, and, given the fact there is a maximum exposure, the ability to budget for a potential loss at trial. The downside is that there is likely to be a shortfall for a successful party, even where there is no CFA, and the winning side may find it having to pay its lawyers’ fees (even where the solicitors have kept to a tight budget) out of any damages award, or even its own pocket. However, it should be remembered that the High Court would generally involve far greater cost and even before this more expensive Court it is unusual for successful parties to recover more than 70% of their cost outlay. In addition, following the Jackson Reforms implemented earlier this year, success fees under CFAs entered into after 1 April 2013 will not in principle be recoverable from the losing side, even in the High Court.
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[1] [2013] EWPCC 37

Trade mark protection for national emblems
A decision of the General Court has confirmed the significant protection that will be afforded […]
A decision of the General Court has confirmed the significant protection that will be afforded to international and national emblems.
Article 7 of the Community Trade Mark Regulation (the Regulation) [1] lists the absolute grounds for refusal of a Community Trade Mark application. These include at Article 7(1)(h): “trade marks which have not been authorised by the competent authorities and are to be refused pursuant to Article 6ter of the Paris Convention” [2] and, at Article 7(1)(i): “trade marks which include badges, emblems or escutcheons other than those covered by Article 6ter of the Paris Convention and which are of particular public interest, unless the consent of the competent authority to their registration has been given”.
The purpose of Article 6ter of the Paris Convention (the Convention) is to protect the armorial bearings, flags and other State emblems of the signatory nations. The Convention gives broad protection to national emblems which contrasts with the protection afforded to trade marks; for example, there is no requirement to show a likelihood of confusion under the Convention.
In Case T 3/12, ‘MEMBER OF €e euro experts’, the mark in issue was a figurative mark (reproduced below [3]) which was registered as a Community Trade Mark. The applicant for cancellation sought to annul the mark based on Article 7(1)(i) of the Regulation. The Cancellation Division rejected the application as the mark was not identical to the Euro symbol. The Board of Appeal overturned that decision, finding the differences from the Euro symbol to be so slight as to be imperceptible and that the public might well believe that there was a connection between the proprietor of the mark and EU institutions. The additional elements to the mark, for example the colour or the link to the letter ‘e’, did not detract from that finding; rather, they gave an additional credence to the notion of an association with the activities of the EU. The proprietor appealed to the General Court.
The General Court dismissed the appeal. It found that the Euro symbol was an emblem of particular public interest within the meaning of Article 7(1)(i) of the Regulation. It was not excluded from protection simply because it was a currency symbol, nor was it material that not all EU Member States had adopted the Euro as their currency. The Court clarified that it was not only identical reproductions of the emblem that were barred from registration under Article 7(1)(i) of the Regulation but also imitations of that symbol, which is parallel to the level of protection afforded under Article 7(1)(h) of the Regulation and Article 6ter of the Convention.
The Court went on to confirm that the differences between the mark in issue and the Euro symbol were unlikely to be perceived by the average consumer – and it was the average consumer whose perception mattered, not a heraldic expert. Further, again upholding the Board of Appeal decision, the public could well believe that the mark in issue had been officially recognised and approved by the EU institutions.
Cases under Article 7(1)(i) of the Regulation do not often arise and so this decision of the General Court serves as a useful reminder of the levels of protection afforded to State emblems.
[1] Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (207/2009/EC)
[2] The Paris Convention for the Protection of Industrial Property

Trade Mark Toolbox: logo trade marks
Logo trade marks – Watch out for copyright! Logos can be registered as trade marks. […]
Logo trade marks – Watch out for copyright!
Logos can be registered as trade marks. An example being the Innocent logo (below):
…which was registered as a Community Trade Mark by Fresh Trading Limited, the trading company of the famous Innocent Smoothies.
When logos are created, the artwork is automatically protected by copyright and under English law the designer is the copyright owner even if the work is commissioned. It is therefore standard practice for copyright ownership to be assigned to the commissioner who is then free to use the logo and register it as a trade mark. Copyright assignments are relatively straightforward agreements but must be in writing.
Unfortunately for Fresh Trading, the designers of the logo are claiming copyright ownership and have challenged Fresh Trading’s Community Trade Mark on the basis that it conflicts with its copyright. The dispute is ongoing. However it is a reminder of the importance to ensure that copyright in a logo is formally transferred to the end user in order to avoid future legal disputes arising.