2020 revisited: six stories that could reshape IP
Managing IP provides a rundown of the major IP talking points from the year, and looks ahead to 2021
When we look back on 2020, we will remember a year like no other. As COVID-19 dominated lives and the US presidency battle became ugly, people watched with a mixture of fear, horror and disbelief.
But as we head towards 2021, there may be light at the end of the tunnel. Each day brings fresh hope of a vaccine being rolled out soon, while Joe Biden is readying for the White House despite the best delaying efforts of Donald Trump.
Although these may be many people's chief memories, we wanted to recap on how 2020 reshaped IP. Read on to find out more.
1) Digital disputes here to stay
If you fell victim to 'Zoom fatigue' in 2020, you should rest and recharge before 2021 – if you're an IP litigator at least. One of the roaring successes of 2020 has been the virtual trial, so much so that it is now the default in some places.
With courts shut down by the COVID-19 pandemic, many of the major IP jurisdictions embraced remote hearings and trials, often reporting positive results.
From the get-go, the UK courts kept IP matters moving smoothly, helped at one point by Mr Justice Birss adjudicating from his barn, while Canada implemented a virtual trial protocol and has since used the video conference as the default. The US Court of Appeals for the Federal Circuit responded particularly well in the US, and the EPO has even mandated that all examination and opposition proceedings be virtual until at least September 2021.
Of course, there will have been plenty of hiccups (many of them IT related) as well as various logistical challenges. One judge in Germany, Hubertus Schacht of the Regional Court in Munich, even revealed (at a Managing IP conference) that he is usually responsible for booking the court's only video camera – and, as it is shared among several chambers, it's not always available.
But despite the teething problems, the clear message is that virtual trials – or at least a physical-remote hybrid – work perfectly well and are here to stay. Like many other areas of COVID life, the IP legal system has shown that some of the things previously considered impossible or unpalatable are not just doable, but actually preferable, in a remote context.
The time and money saved and the environmental harm spared are just some of the major benefits of shunning in-person trials, even if those involved may inevitably feel more exhausted as a result.
2) Biden's IP in tray
Joe Biden, who won the US presidency in November, is no stranger to IP: he was vice president in 2011 when Congress enacted the America Invents Act, which turned the US into a first-to-file patent system and established the Patent Trial and Appeal Board.
This familiarity is probably a good thing, because Biden will almost certainly try to introduce his own IP laws or change some existing ones – potentially those relating to patents, and almost definitely those on copyright.
He has a mixed record when it comes to access to medicine and patents, both opposing compulsory licences on human therapeutics and backing calls for curtails on pay-for-delay settlements and 'evergreening', so it's unclear what he might do here, if anything.
Biden is much more likely, at least at first, to focus on strengthening copyright protection. He was seen as a champion of copyright protection when he chaired the Senate Judiciary Committee, and maintained that reputation early in his role as vice president by convening an IP summit, which involved efforts to boost enforcement.
He has long condemned piracy and has expressed discontent for the immunity given to social media companies that publish third-party content that violates IP rights.
Of course, these potential changes won't take priority in Biden's agenda. But having said that, in the immediate term Biden will be most influential in three IP-related areas that have already been set out for him: China, the USPTO and the Department of Justice (DoJ).
Biden will need to decide whether to maintain or renegotiate the first phase of the US-China trade deal (and its IP provisions), which Donald Trump signed in January. He will almost certainly replace the current USPTO director Andrei Iancu, who was picked by Trump, and will need to find a new DoJ Antitrust Division head when Makan Delrahim leaves in 2021.
It could be a big four years for Biden – and that's just in IP.
3) A shake-up for fakes?
One area that has been a major talking point throughout 2020 – and will continue to be in 2021 – is the EU's proposed Digital Services Act (DSA).
As part of the EU's future digital strategy, the European Commission announced that it would revise the 20-year-old e-Commerce Directive – which, until now, has been the centrepiece of EU legislation governing online platforms.
The Commission, having digested reports from three EU committees, was expected to table its DSA proposals today.
The proposals are then expected to be discussed and eventually voted on by the European Parliament and member states – but not, of course, by the UK, which will be free (if it wishes) to adopt its own rules governing online IP enforcement after Brexit.
One senior in-house source says that if done right, the DSA could give brand owners their best opportunity in two decades to tackle online counterfeiting.
At the top of brand owners' wish lists is for the DSA to require e-commerce platforms to be proactive and potentially introduce filtering mechanisms to detect suspected counterfeit goods.
However, there are fears that this element could be watered down or that the DSA will not seek to drastically change existing rules.
At the moment, the directive stipulates that platforms can avoid liability for the sale of counterfeit goods and can only be liable if they receive knowledge of alleged illegal activity and choose not to intervene.
Although we may have a good idea of what the commission is proposing as we go into 2021, one lawyer points out that the political "games" that will determine what finally makes it into the DSA – or if the DSA even makes it into law at all – have probably only just begun.
4) China's leap forward
In the past 12 months, China has progressed steadily in strengthening its IP environment.
As demonstrated by CNIPA's yearly plan, released in May, one of the priorities is to improve patent quality with a key goal being the phasing out of subsidies for utility model and design patents. This will help to decrease the filing of patent applications that do not get examined substantively – and get granted quickly – and encourage enterprises to demonstrate their innovative abilities.
IP practitioners in China are also preparing for changes to the Patent Law that come into effect in June 2021. One of the key changes is the increase in statutory damages from RMB 1 million ($148,502) to RMB 5 million. This is a positive move, showing that China is strengthening its patent enforcement system to punish infringers and increase the value of Chinese patents.
Another important area that China is increasingly paying attention to is trade secret protection. The latest developments came in September when the Supreme People's Court issued judicial opinions on the civil and criminal enforcement of trade secrets. The opinions provided much-needed clarity on trade secret definitions and misappropriation, among other areas.
While China's IP systems have improved significantly, there is much work to be done to ensure that new regulations don't just look good on paper but are implemented effectively through the courts and local enforcement authorities.
5) FRAND's big summer
For some IP practitioners, the summer of 2020 will be remembered for one thing: fair, reasonable and non-discriminatory (FRAND) court decisions won by standard essential patent (SEP) owners.
SEP owners had long accused implementers of so-called hold-out behaviour whereby they stall negotiations by requesting further information about the patent portfolios or by accusing the SEP owners of antitrust breaches.
In May, the pendulum began to swing largely in favour of SEP owners when Germany's Federal Court of Justice issued a ruling in Sisvel v Haier that said it is not enough for an alleged infringer simply to declare a willingness to accept a licence. Instead, the presiding judge Peter Meier-Beck said, implementers must accept an offer that is FRAND.
The good news for SEP owners continued in August when the Mannheim Regional Court issued an injunction against Daimler for violating SEPs. The car maker is accused of fighting a 'holy war' against Nokia to force licensing at the component level instead of the product level. While Daimler has said it will appeal the decision, questions remain over whether Nokia will enforce the injunction.
The FRAND crescendo came in August with the long-awaited decision from the UK Supreme Court in Unwired Planet v Huawei. It upheld Mr Justice Colin Birss's ruling that companies must accept a global FRAND rate when they do not agree on licensing terms, or risk an injunction in the UK.
SEP owners said the ruling gives them more leverage to bring implementers to the table to agree on terms, and that it established the UK as a preferable jurisdiction for rights owners looking for a global FRAND licence.
With further developments likely in Nokia v Daimler and the post-Unwired Planet landscape to become even clearer, 2021 may provide a year to remember – not just a summer.
6) A new-look DMCA?
This year the US Senate hosted a series of hearings dedicated to reforming the Digital Millennium Copyright Act (DMCA). The talks have paved the way for draft legislation, which, Senator Thom Tillis told Managing IP at time of press, he expected to release by December 18. He added that he plans to overhaul the act and reform the framework of the bill.
The DMCA, signed into law in 1998, was intended to be a compromise between the interests of online service providers that didn't want to be held liable for third-party copyright violations and copyright owners that were concerned about infringement.
The hearings, which Tillis presided over, made it clear that multiple stakeholders had problems with the act but for different reasons.
Copyright owners, for example, argued that the DMCA has failed to do enough to hold tech companies responsible for keeping infringing content off their platforms.
But others argued that false notices of infringement were rampant and that placing too much of a burden on tech could make it impossible for smaller online platforms to enter the market.
Copyright owners tended to be happier with Section 1201, which makes it illegal to circumvent technological measures that prevent unauthorised access to copyrighted works, arguing that it works well and was key for the digital revolution.
But some speakers raised concerns that Section 1201 did more harm than good. Although the Copyright Office has a triennial rulemaking process to determine exemptions to this act, some feel this procedure is overly burdensome.
Based on the testimony at these hearings, it will be difficult to craft new legislation that pleases everyone. In 2021, stakeholders will have to decide whether the proposed new bill is better than the alternative.
And then there was Brexit …
We couldn't compile this list without mentioning Brexit, even if technically it takes effect on January 1 2021.
The UK will finally split from the EU after four-and-a-half (long) years of debate and division. Beyond the political, economic and emotional upheaval, there will be (and have already been) many implications for IP.
While there are too many changes to list here, we have a handy explainer on managingip.com where you can find out more.
With that, we bid you a happy end to 2020 and wish you a prosperous 2021.