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This week in IP: Fenwick & West pays tribute to co-founder, China targets ‘IP powerhouse’ status, and more

Senate to hold Pride in Patent Ownership hearing; Sinclair resolves polar bear dispute; Teva beats Bayer in UK; Federal Circuit says PTAB structure is constitutional; US Copyright Office to study ancillary rights; USPTO allows DVDs for patent data; US government will participate in Unicolors v H&M

‘Radical’ Optis decision shuts door on SEP hold-out

The England and Wales High Court has laid down a “radical” ultimatum to implementers in standard-essential patent licensing disputes, sources told Managing IP this week.

They said that while the headline news from Optis v Apple, decided on September 27, was that Apple could face an injunction blocking the sale of iPhones in the UK, the big thing for them was the precedent set of an implementer being asked to agree to a licence without knowing the terms.

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Other Managing IP stories published this week include:

Senate IP committee to hold Pride in Patent Ownership hearing

The Senate IP subcommittee will hold a hearing on Tuesday, October 19, to discuss the Pride in Patent Ownership Act, which – if passed – would compel patent owners to disclose their identity to the USPTO when a patent was issued or when patent ownership changed.

Senators Patrick Leahy and Thom Tillis introduced the act on September 21, along with the Unleashing American Innovators Act, which would require the USPTO’s satellite offices to conduct outreach to increase participation in the patent system from underrepresented groups.

The hearing will start at 2.30pm EST on October 19 in the Dirksen Senate Office Building, room 226, with Leahy presiding. It will be available to watch online via the Senate Judiciary Committee website.

Former USPTO director David Kappos will serve as a witness at the hearing, as will Allon Stabinsky, deputy general counsel at Intel, Abigail Rives, IP counsel at Engine, and Robin Feldman, a professor at the Hastings College of the Law, University of California.

US government will participate in Unicolors v H&M

The US Supreme Court granted a request from the government on Tuesday, October 12, to participate in oral arguments in Unicolors v H&M, a case concerning the language of Section 411 under Title 17 of the US Code.

The high court granted Unicolors’ petition for writ of certiorari in June. It is now set to decide whether the Court of Appeals for the Ninth Circuit properly construed the language in Section 411 on whether courts must have evidence of intent to defraud before referring copyright registration validity questions to the Copyright Office.

In 2011, Unicolors – a company that creates designs for use on textiles and garments – applied for a two-dimensional artwork at the Copyright Office (which granted the registration) comprising 31 separate designs in a single registration.

The company said that all the included designs were sold to the public simultaneously, claiming one date of first publication. At trial, however, it was revealed that some of the designs were sold to different customers at different times.

After discovering in 2015 that H&M was selling garments bearing an allegedly identical artwork, Unicolors sued for copyright infringement.

The Ninth Circuit ruled in May 2020 that on the basis of the inaccurate information – despite Unicolors’ argument that it had not intended to deceive and had only intended to try to save money – the district court was required to refer the copyright registration to the Copyright Office to advise whether the inaccuracies would have precluded registration.

Counsel told Managing IP in June that the case could encourage or curtail copyright trolls, depending on the outcome. 

China targets ‘IP powerhouse’ status

China has set a target to become an intellectual property powerhouse within 15 years, it was announced on Wednesday, October 13.

The declaration was made in a joint statement from the Central Committee of the Communist Party and the State Council (the cabinet), which set out development targets for the country’s IP system until 2035.

The bodies declared that by 2025, the added value of patent-intensive industries would account for 13% of China’s GDP, with copyright industries contributing 7.5%.

Imports and exports of IP royalties would total RMB 350 billion ($54 billion), the two organisations stated, while the population would produce 12 high-value invention patents per 10,000 people.

Commenting on the announcement, the CNIPA said China was transforming from a big IP rights importer to a big innovator. It added that IP work was shifting from the pursuit of quantity to the improvement of quality.

“As China enters a new stage of development, we are vigorously implementing the new development concept and actively constructing a new development pattern, which is inseparable from the strong support of IPR,” the office said.

China has been keen to champion its progress on strengthening its national IP system in recent years, amid high-profile disputes with the US over its policies.

The Trump administration frequently accused China of state-sponsored IP theft from US companies, while also claiming that US companies were forced to transfer technology to Chinese rivals to enter the Chinese market.

China has denied those claims, while also working to improve its IP reputation. Despite denying the practice existed, the government formally outlawed forced technology transfer in 2019, and has implemented various reforms to its patent, trademark and copyright laws.

USPTO says applicants can use DVDs to provide patent data

Patent applicants can use DVDs to provide data to the USPTO as of November 15, the office announced on Wednesday, October 13, through a notice on the Federal Register.

Applicants can currently only use CDs in instances when the plain text data required to prove an invention is patentable exceeds the USPTO electronic filing system’s capacity. DVDs can store greater quantities of data than CDs.

This will “significantly reduce the number of physical media required to accommodate large files”, the office stated in its notice.

The new rules also allow non-self-extracting file compression and scrub references to older and obsolete computers such as IBM-PC from the rules of practice.

Sinclair resolves copyright dispute over polar bear video

Sinclair Broadcast Group and Canadian photographer Paul Nicklen settled their dispute at the US District Court for the Southern District of New York on Tuesday, October 12, over the embedding of a video showing a starving polar bear.

The district court noted that the parties agreed to dismiss their claims with prejudice, which meant they could not file a dispute on the same cause of action again.

Nicklen, a photographer and filmmaker, sued Sinclair and others for displaying the video without authorisation after he posted it on his Facebook and Instagram accounts.

Judge Jed Rakoff denied Sinclair’s motion to dismiss the case in July after the company used the controversial server test to argue that it couldn’t have infringed Nicklen’s copyright in the video because it simply embedded the media on its websites from social media platforms.

In his decision, Rakoff departed from precedent set by the Court of Appeals for the Ninth Circuit (which does not cover New York) to hold that the server test was “contrary to the text and legislative history of the copyright act”.

Teva succeeds in obviousness claim against Bayer cancer drug

In a big win for Israeli pharmaceutical company Teva on Friday, October 8, the England and Wales High Court invalidated a claim directed at Bayer’s cancer drug Nexavar.

Mr Justice James Mellor found that claim 12 of the patent was invalid because of obviousness. The decision was a boost for Teva, which was keen to market its own generic version of the drug used to treat liver and kidney cancer.

The patent in question (EP (UK) 2,305,255) protected the compound of a tosylate (a type of salt) of the drug’s active ingredient, sorafenib.

The dispute turned on whether it was obvious to include the tosylate salt in a salt screen, as outlined in the claim.

Salt screens are used to alter the physicochemical properties of a compound for drug development. Typically, according to the judgment, a formulator would consider the properties of the base drug compound and select salts they thought would be a good match to include in the salt screen.

Mellor concluded it would be obvious to include tosylate.

“I find it was obvious for the skilled formulator to include the tosylate salt of sorafenib in his or her salt screen. S/he would have directed their medicinal chemists to make sorafenib tosylate and the other selected salts,” he wrote.

Mellor added: “The primary factor in the salt selection process was the skilled formulator’s consideration of the pKa [a number that identifies the strength of an acid] range of sorafenib and the pKas of the various counterions. Those considerations would have identified tosylate as an attractive candidate.”

Daniel Alexander QC of 8 New Square and Anna Edwards-Stuart of 11 South Square (instructed by Bristows) acted for Teva while Thomas Mitcheson QC and Stuart Baran of Three New Square (instructed by Simmons & Simmons) represented Bayer.

Fenwick & West pays tribute to co-founder

Law firm Fenwick & West paid tribute its co-founder William (Bill) Fenwick following his death last week.

The intellectual property specialist firm described Fenwick as a visionary leader who cultivated an environment where people had freedom to pursue their professional destinies.

He died aged 83 on October 4, the firm announced on Thursday, October 7.

As a law student in the 1960s, Fenwick worked the night shift in a computer operations centre to support his young family.

By 1972, he was working for a Wall Street firm but moved to what was then the emerging Silicon Valley to start Fenwick & West alongside the firm’s co-founders.

As managing partner, he helped steer the firm through early phases of growth and in 1976 met a young Steve Jobs and Steve Wozniak to incorporate Apple.

He later litigated major cases and counselled multiple generations of entrepreneurs in the high technology and life sciences fields.

Describing him as a “champion of civil rights, diversity and inclusion”, the firm said he believed in an egalitarian culture of mutual respect, which he carried throughout his legal career.

The firm added: “Fenwick is proud to bear his name and carry on his vision and legacy – as a firm driven to understand the technologies and industries of our clients, and to embrace technology and an entrepreneurial approach in the practice of law.”

Federal Circuit says PTAB structure is constitutional

The US Court of Appeals for the Federal Circuit rejected arguments from non-practising entity Mobility Workx on Wednesday, October 13, ruling that the structure of the Patent Trial and Appeal Board was constitutional.

In Mobility Workx v Unified Patents, the appellate court dismissed the argument that administrative patent judges (APJs) had an interest in instituting proceedings to fund the USPTO and ensure job stability.

The court pointed out that the chief APJ, deputy chief APJ, and vice chief APJs were not responsible for the USPTO’s finances. It added that Congress set the USPTO’s budget, which meant that any agency interest in fee generation was too tenuous to be a due process violation.

The Federal Circuit also disagreed with the NPE’s assertion that APJs had an interest in instituting proceedings to earn better performance reviews and bonuses.

It did, however, remand the decision to the PTAB to allow Mobility to request director rehearing of the final written decision, which it was entitled to under US v Arthrex.

The appellate court declined to review the merits of the PTAB decision until Drew Hirshfeld, who was performing the functions and duties of the USPTO director, determined whether a rehearing was warranted.

Mobility sued T-Mobile and Verizon for patent infringement in 2017 in the District Court for the Eastern District of Texas. One of the disputes settled and the other was stayed pending this appeal. Unified Patents – of which both telecoms companies were members – filed an inter partes review in June 2018.

In 2019, the PTAB found that some of Mobility’s claims were unpatentable because they were obvious. Mobility then appealed to the Federal Circuit.

US Copyright Office to study ancillary copyright for publishers

The US Copyright Office announced on Tuesday, October 12, that it would conduct a study of ancillary copyright protection for publishers, or the rights of publishers to prohibit third-party online services from reproducing press publications.

The office said in a notice published on the Federal Register that it would investigate the issue at the request of Congress, noting that there were concerns that online news aggregators – which included search engines and social media platforms – allowed readers to get news without visiting publishers’ websites.

The copyright office also acknowledged arguments that news aggregators drove readers to new websites and got them to click on more articles than they would normally.

Comments are due by November 26. The office wants to know how effective current protections are for press publishers, whether more protections are desirable and how new protections would interact with existing rights and international treaty obligations.

The office will hold a virtual roundtable to discuss this issue on December 9.

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