AI & IP
While AI has long been part of our digital lives (think assistants like Siri and Alexa), generative AI – a form of machine learning that allows computers to generate content from prompts – exploded onto the scene in 2022, propelled by advances in technology and computing power.
In 2023 it went mainstream, with commercial applications and uptake growing exponentially. AI will continue to disrupt in 2024. Multimodal generative AI (AI that can process and generate more than one type of data, e.g, text, images, and audio) has been heralded as the next big thing.
The development of AI-specific regulation has accelerated rapidly in recent months and will continue to do so in 2024, with the aim of ensuring that AI deployment is ethical, transparent, and safe.
The EU has led the way, with the world’s first bespoke legislation for AI. 2024 should see the bloc’s ‘AI Act’ finalised and some of its provisions enter into force (it will not be fully in force until 2026). China also introduced some of the earliest AI regulation, and a comprehensive draft AI law should follow in early 2024. In the US, President Biden’s recent executive order on AI also marked a significant development in regulating AI and is likely to spur further action in 2024.
While this raft of new regulation generally preserves the existing IP landscape (thus far), it contains provisions that aim to find an appropriate balance between AI providers and IP rights owners. For example, the EU’s AI Act contains transparency provisions requiring AI providers to publish detailed summaries of the copyright content used in their training data, thereby equipping rights owners to police the use of their content by AI developers.
The US executive order will keep Kathi Vidal, under-secretary of commerce for IP and director of the USPTO, busy in 2024, tasking her with providing guidance on AI’s role in patent inventorship, and working with the US Copyright Office to draft recommendations on the use of copyright material to train AI (among other things).
Meanwhile, the UKIPO has been working with industry stakeholders to agree on a voluntary code of practice on copyright and AI to make licences for data mining more available. That code was initially promised by summer 2023. However, the UK’s AI minister, Viscount Camrose, recently admitted that it is unlikely to be forthcoming before 2024 and that legislative intervention may ultimately be required to resolve the current stalemate between content creators and AI companies on the best way to proceed.
As we advance into 2024, we expect that rulings in pending US and UK disputes will bring greater clarity concerning the boundaries of the legitimate use of copyright material to train AI systems under existing laws.
The IP world will closely monitor developments in the US and UK actions brought by Getty Images against Stability AI and in the various class actions brought by authors against AI developers in the US about the unauthorised use of their copyright material to train AI. These cases should provide welcome guidance on the legality of the various stages of training and use of AI models under existing laws.
Finally, various pending cases will also explore IP protection for AI-generated content, including several pending cases in the US and China which will explore copyright protection for AI works in those jurisdictions, including where AI is used as part of the author’s creative process.
FRAND licensing
2024 is set to be a big year for standard-essential patent (SEP) litigation and the determination of fair, reasonable, and non-discriminatory (FRAND) licensing terms, particularly in the UK.
Since the UK Supreme Court’s decision Unwired Planet v Huawei in 2020, English courts have been notable for their willingness to determine FRAND terms for SEP licences, including FRAND royalty rates, on a global basis. As the first jurisdiction in the world to determine global licensing terms without the consent of both parties – and with courts in England and Wales also ruling that they have jurisdiction to grant a UK injunction if the implementer fails to take a license on FRAND terms set by the court – English courts have become an attractive forum for SEP owners.
China’s Supreme People’s Court has ruled (and recently reaffirmed) that Chinese courts also have jurisdiction to grant global licensing rates for SEPs – at least where the dispute has a close nexus with China and the parties have negotiated on a global basis. Similarly, the Delhi High Court has recently permitted a global FRAND rate claim to proceed in Nokia v Oppo. The coming year may therefore see SEP owners forum shop to bring proceedings in whichever jurisdiction they think will set the highest global FRAND rate.
In the UK, 2024 is set to bring the next wave of FRAND determination proceedings, including the dispute between Panasonic, Xiaomi, and Oppo over Panasonic’s 4G portfolio. This case is already notable as the judge has agreed to Xiaomi’s request to schedule the FRAND trial first, as early as October 2024. This bucks the usual trend of trial sequencing, whereby technical trials on infringement and validity are heard first. A shift towards “FRAND-first” sequencing, if it becomes typical, could lead to earlier settlements and less time spent in litigation by dealing with this major commercial issue first.
The typical sequencing of technical trials before FRAND trials in UK proceedings raises another question: where technical trials are held first and a patent has been determined valid and infringed, is the SEP owner entitled to an injunction unless and until the implementer commits (via an undertaking to the court) to entering into the yet to be determined FRAND terms? The England and Wales Court of Appeal has held that injunctions (which cease if a FRAND licence is agreed) are available in these circumstances. This issue was due to be considered by the Supreme Court in early 2024 but the appeal was withdrawn. The Supreme Court will, however, hear related issues in Nokia v Oppo in 2024, and may shed some light on this issue.
Meanwhile, the EU Commission has proposed a new regulation on SEPs that aims to increase transparency and predictability in SEP licensing by introducing a central SEP register, essentiality checks, and a mandatory FRAND conciliation procedure that would precede national court proceedings. However, this proposal has faced strong criticism from many stakeholders, including various standard-setting organisations, and, while the co-legislators will form their respective positions on the proposal during 2024, trilogue negotiations are not expected before 2025. Progress may therefore be slow.
Interestingly, “FRAND” terminology appears in other new EU legislation in the context of data licensing. It appears in both the EU Digital Markets Act (which is already in force and requires compliance with its terms by March 2024) and the EU Data Act (which comes into effect in 2025). These regulations require that certain categories of data, including data collected by dominant digital platforms and data relating to the use of connected devices, be made available on FRAND terms. It remains to be seen whether any learnings from the FRAND licensing of SEPs will apply to the FRAND licensing of data.
UPC momentum
As many will be aware, the Unified Patent Court (UPC) is a new venue for European patent litigation which opened its doors on June 1, 2023. It has exclusive jurisdiction over unitary patents as well as “classic” European patents (subject to transitional provisions and opt-outs). Its key promise is the possibility of obtaining a single judgment in one set of proceedings which is then enforceable in up to 17 participating EU member states.
There are now more than 100 cases pending before the various divisions of the UPC, spanning sectors including mobile telecoms, luxury goods, and life sciences, and involving parties from all over the world. The UPC’s first two inter partes preliminary injunction decisions concerned 10X Genomics and Nanostring – both large, US-headquartered biotech companies.
With a growing reputation for high-quality and speedy decisions, and the ability to grant cross-border relief, including preliminary injunctions, the UPC is already proving to be an attractive forum to patentees. We wait to see whether this will continue in 2024, as the first full (as opposed to preliminary) decisions on infringement are given and the first indications of invalidity rates become apparent.
While the UPC Court of Appeal is already active (having made its first decision in October 2023 in proceedings between Sanofi and Amgen), we look forward to further appeal decisions in 2024. This could include important procedural issues such as access to pleadings – an issue on which we have already seen diverging approaches from the UPC’s local divisions. The Court of Appeal will play a critical role in fostering consistency of approach as the court finds its feet.
Finally, 2024 may see an eighteenth participating EU member state. Ireland signed the UPC Agreement in 2013, but has not ratified it, and will require a referendum before it does so. However, the latest from the Irish government is that this referendum is likely to be held in June 2024, concurrent with local and European elections. Assuming a successful referendum, Irish participation, and an Irish local division of the UPC, could follow shortly thereafter.
Energy transition & IP
As the world confronts the challenges of climate change, governments and businesses are increasingly ambitious in their strategies to adopt sustainable practices, improve energy efficiency, and transition to renewable energy sources. Among the most ambitious are net-zero commitments, i.e. committing to cutting greenhouse gas emissions to as close to zero as possible.
The UN reports that a growing coalition of countries, businesses, and other institutions are pledging to get to net zero. More than 140 countries including China, the US, and the EU have set net-zero targets, as well as thousands of companies, cities, and institutions.
This energy transition requires technological innovation, including in the form of alternative fuels, carbon capture, process optimisation, and low- or no-carbon alternatives.
While the end of 2023 saw a downturn in investment in net-zero technologies, the push for cleaner energy sources retains wide support at all levels of society. We therefore expect energy transition to continue to be transformative in 2024, with increased focus in R&D and a surge in green patent filings. We also expect to see continued focus on energy transition-related investments and M&A activity, as companies turn to energy transition-related M&A to access this critical technology, demonstrate their commitment to sustainability, and gain competitive advantage.
