Blake Lapthorn hosts inaugural TAG - IP speciality conference

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Presentation from Blake Lapthorn's inaugural TAG - Intellectual Property speciality conference at New Kings Court on the weekend of 19-21 March.

Presentation from Blake Lapthorn's inaugural TAG - Intellectual Property speciality conference at New Kings Court on the weekend of 19-21 March.

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  • Fraudulent Misrepresentation – Comments on Joe Galloway of EDS Although the Judge’s findings of fraud related to only one EDS former employee, Joe Galloway, he was the MD of the relevant part of EDS’ business bidding for the CRM system. The Judge described him as: “ the mastermind for EDS’ Response to the ITT ... he demonstrated an astounding ability to be dishonest and his credibility was completely destroyed by his perjured evidence over a prolonged period”. It is clear from the comments of the Judge that Mr Galloway was found not only to have misled BSkyB at the ITT stage, but that he also repeatedly lied during the giving of evidence at trial. Against this background, it is not surprising that on any matter of disputed fact, the Court invariably preferred BSkyB’s evidence to that of EDS.
  • Court’s Comments in relation to Repudiation “ However, I have come to the conclusion that, viewed objectively, neither the breaches alone nor the combination of breaches amounted to a repudiatory breach of the Prime Contract… The contemporaneous correspondence is inconsistent with that view and the delay to the milestones had not reached a stage where I consider that it amounted to a repudiatory breach. As I have said, most of the failures on behalf of EDS reflected delay in performance. In any event…there has been no acceptance of any repudiatory breach. An innocent party, faced with a repudiatory breach, has a choice. It can either elect to treat the contract as continuing or it can bring the contract to an end by acceptance of a repudiation. Unless and until a repudiation is accepted, the contract continues in existence…”
  • EDS’ Defence Based on the Contract’s Entire Agreement clause The relevant clause stated that the Agreement shall “ represent the entire understanding and constitute the whole agreement between the parties in relation to its subject matter and supersede any previous discussions, correspondence, representations or agreement between the parties …”
  • Court’s Comment on the Contractual Status of the Memorandum of Understanding “ Given the blanket ‘subject to contract’ statement at the head of the Memorandum of Understanding, I do not consider that EDS are correct to divide the document up and try to distinguish between the terms of one section and the others. The fact that EDS accept that the first and third sections are consistent with the ‘subject to contract’ rubric is, in my judgment, strong support for the general applicability of that principle to the whole document. On this basis, I consider that the whole of the signed Memorandum of Understanding was not a legally binding agreement when it was signed. What happened in this case is that the parties proceeded on the basis that there would be a new contract but that process failed to come to fruition, partly because the immediate need for a new contract faded because Sky took over EDS’ role as Systems Integrator. I consider that the parties proceeded on the basis that a new contract would be entered into but they failed to do so. It follows that the Memorandum of Understanding does not give rise to any full and final settlement, nor does it give rise to new warranty provisions.”
  • Court’s Comments on Mitigation “ I accept that there is a large gap between the effort and time which Sky took to complete the Actual CRM System and the effort and time which a competent, Alternative Systems Integrator might have taken to achieve that implementation. There are a number of reasons why that might have happened ... EDS has sought to rely on particular deficiencies but I do not consider that they have established a case that the additional costs were caused by Sky acting unreasonably and thereby failing to mitigate their loss. I do not consider that EDS can mainly rely on the gap between the effort and time which a competent, Alternative Systems Integrator might have taken and seek thereby to establish that Sky acted unreasonably. Sky acted reasonably in taking over as Systems Integrator and proceeded in an attempt to achieve go-live as soon as possible using EDS personnel and other external specialist resources. Inevitably there were problems in achieving go-live but that does not establish that Sky acted unreasonably.”
  • Fraudulent Misrepresentation – Comments on Joe Galloway of EDS Although the Judge’s findings of fraud related to only one EDS former employee, Joe Galloway, he was the MD of the relevant part of EDS’ business bidding for the CRM system. The Judge described him as: “ the mastermind for EDS’ Response to the ITT ... he demonstrated an astounding ability to be dishonest and his credibility was completely destroyed by his perjured evidence over a prolonged period”. It is clear from the comments of the Judge that Mr Galloway was found not only to have misled BSkyB at the ITT stage, but that he also repeatedly lied during the giving of evidence at trial. Against this background, it is not surprising that on any matter of disputed fact, the Court invariably preferred BSkyB’s evidence to that of EDS.
  • Court’s Comments in relation to Repudiation “ However, I have come to the conclusion that, viewed objectively, neither the breaches alone nor the combination of breaches amounted to a repudiatory breach of the Prime Contract… The contemporaneous correspondence is inconsistent with that view and the delay to the milestones had not reached a stage where I consider that it amounted to a repudiatory breach. As I have said, most of the failures on behalf of EDS reflected delay in performance. In any event…there has been no acceptance of any repudiatory breach. An innocent party, faced with a repudiatory breach, has a choice. It can either elect to treat the contract as continuing or it can bring the contract to an end by acceptance of a repudiation. Unless and until a repudiation is accepted, the contract continues in existence…”
  • EDS’ Defence Based on the Contract’s Entire Agreement clause The relevant clause stated that the Agreement shall “ represent the entire understanding and constitute the whole agreement between the parties in relation to its subject matter and supersede any previous discussions, correspondence, representations or agreement between the parties …”
  • Court’s Comment on the Contractual Status of the Memorandum of Understanding “ Given the blanket ‘subject to contract’ statement at the head of the Memorandum of Understanding, I do not consider that EDS are correct to divide the document up and try to distinguish between the terms of one section and the others. The fact that EDS accept that the first and third sections are consistent with the ‘subject to contract’ rubric is, in my judgment, strong support for the general applicability of that principle to the whole document. On this basis, I consider that the whole of the signed Memorandum of Understanding was not a legally binding agreement when it was signed. What happened in this case is that the parties proceeded on the basis that there would be a new contract but that process failed to come to fruition, partly because the immediate need for a new contract faded because Sky took over EDS’ role as Systems Integrator. I consider that the parties proceeded on the basis that a new contract would be entered into but they failed to do so. It follows that the Memorandum of Understanding does not give rise to any full and final settlement, nor does it give rise to new warranty provisions.”
  • Court’s Comments on Mitigation “ I accept that there is a large gap between the effort and time which Sky took to complete the Actual CRM System and the effort and time which a competent, Alternative Systems Integrator might have taken to achieve that implementation. There are a number of reasons why that might have happened ... EDS has sought to rely on particular deficiencies but I do not consider that they have established a case that the additional costs were caused by Sky acting unreasonably and thereby failing to mitigate their loss. I do not consider that EDS can mainly rely on the gap between the effort and time which a competent, Alternative Systems Integrator might have taken and seek thereby to establish that Sky acted unreasonably. Sky acted reasonably in taking over as Systems Integrator and proceeded in an attempt to achieve go-live as soon as possible using EDS personnel and other external specialist resources. Inevitably there were problems in achieving go-live but that does not establish that Sky acted unreasonably.”

Transcript

  • 1. TAG IP conference 19 – 21 March 2010
  • 2. Introduction Jonathan Lloyd-Jones
  • 3. Topical issues in e-commerce TAGLaw
  • 4. Google AdWords Jill Bainbridge Partner & Head of Intellectual Property Blake Lapthorn
  • 5. The web is the way ahead
    • In 2009 on-line advertising overtook TV advertising for the first time
    • On-line + 5%
    • TV – 16%
  • 6. AdWords/Keywords
    • Search providers allow users to sponsor AdWords/keywords which may be the trade mark of another
    • Keywords used to rank websites in a search
    • Sponsored keywords rank higher
  • 7. AdWords/Keywords
    • Not evident on the face of search result
    • Is that “use” for trade mark infringement purposes?
  • 8. The story so far…
    • From 5 May 2008 Google changed its policy in the US, Canada, UK and Ireland such that it will only disable keywords where the registered trade mark appears in the heading or text of the advert
  • 9. Google policy elsewhere
    • Google has a different policy elsewhere and in particular throughout the rest of the EU.
    • That policy provides that on receiving a complaint from a mark holder Google will require the advertiser to remove its use of the mark as:
    • - advertisement text; or
    • - keyword
  • 10. French cases
    • Louis Vuitton & others sued Google France for trade mark infringement on the basis of use of sponsored keywords under Article 5 (1) (a) and (b) and 5 (2) of EU TM Directive ( 2008/95/EC)
  • 11. Article 5 (1) (a) test for infringement
    • ECJ previously indicated 4 conditions must be satisfied:
      • use must be in course of trade
      • it must be without consent of owner
      • in respect of goods or services identical to those for which mark registered
      • must affect, or be liable to affect, functions of trade mark, in particular, guarantee of origin
  • 12. French questions
    • Cases C-237/08 C-236/08 C-238/08
    • Whether a person providing identical or similar goods to those for which TM registered can reserve a keyword which reproduces or imitates the TM
    • Whether a keyword service provider can sell keywords and then in response display advertising links to sites offering infringing goods
  • 13. More French questions
    • Whether if the mark has a reputation the owner can oppose such use on the basis of unfair advantage or causes detriment
    • Whether keyword provider is an ISP and can therefore take advantage of safe harbour provisions of E Commerce Directive if upon notification they take down infringing material expeditiously
  • 14. Advocate general opinion on French referral to Court of Justice
    • Advocate General opinion points Court of Justice towards a ruling that permits Google Adwords
    • Use of the tool itself cannot amount to trade mark infringement
  • 15. Articles 5 (1) (b) & 5 (2)
    • In addition further requirements for infringement :
    • eg 5 (1) (b) need to show likelihood of confusion on part of public
  • 16. Keyword use
    • Attorney General said 2 elements:
    • Offer by Google to advertisers of keywords to sponsor
    • Display of adverts in response to input of keywords
  • 17. Offer of keywords to sponsor
    • No infringement
    • No use in relation to goods
    • Advertisers acting as consumers and not in course of trade
  • 18. Display of adverts in response to input of keywords
    • No infringement
    • Searchers unlikely to be confused into thinking results necessarily linked to the trade mark owner
  • 19. Famous marks
    • Attorney General concluded the need for freedom of expression and commerce outweighed need to protect investment that goes into such marks
  • 20. Dutch cases
    • 5 questions have been raised in the Portakabin case (C07/056HR)
    • Does use of a TM as a keyword constitute use for goods and services under E Commerce Directive
    • Does it make a difference if the results come up in ordinary search results or as a sponsored link
    • Does it make a difference if the offer for sale of identical goods appears on the page generated by the search engine or only on the advertiser’s web page accessed through the link
  • 21. More Dutch questions
    • If it is use, is it permissible to use the TM or a variation of it on the grounds it is descriptive or TM rights have been exhausted
    • If it is not use, can a member state apply it’s own national TM law if the activity occurs without just cause and takes unfair advantage of or is detrimental to the distinctive character or repute of the relevant mark
  • 22. Germany – Bananabay Case (IZR 125/07)
    • Mark used by a competitor as an AdWord in same field of adult entertainment. The Court held that use of a descriptive term would not infringe but asked the ECJ:
      • does use of a third party’s trade mark as a keyword on identical goods/services constitute TM infringement under the Directive?
  • 23. UK – Interflora v Marks & Spencer & others L’Oreal v eBay
    • The UK has now added to the list of questions as a result of issues raised in these cases. However, the risk is, a common set of answers from the Court of Justice could leave confusion in UK & Ireland given that Google policy differs in the UK & Ireland compared with the rest of the EU
  • 24. Interflora
    • Issue
      • bidding by competitors for “ interflora” keywords
    • Impact
      • Interflora still ranked higher on Google search results than bidding competitors e.g. Marks & Spencer
  • 25. Commercial Impact
    • Interflora’s bidding costs for keywords increased dramatically in order to preserve their ranking.
    • Costs in the 9 days leading up to Valentine’s Day increased from 2p per click in 2008 to 23 – 28p per click in 2009. Total costs estimated to have increased by $750,000 in the year from 5 May 2008 to May 2009
  • 26. L’Oreal v eBay
    • Issue
    • Use of keywords relating to eBay sales of infringing goods
    • e.g. counterfeits and grey imports
  • 27. UK Questions
    • 1 Are any of the following “use” of a sign by a competitor as per Art.5(1) (a) Directive 89/104/EEC:
    • Selects a sign which is identical with TM as a keyword for a sponsored link
    • Nominates the sign as a keyword
    • Associates the sign with the URL of its website
    • Sets the cost per click it will pay in relation to that keyword
    • Schedules the timing of the display of that sponsored link
  • 28. More UK Questions
    • Uses the sign in business correspondence relating to invoicing and payment of fees or the management of its account with the search operator, but the sponsored link does not itself include the sign or any similar sign
  • 29. More UK Questions
    • 2. Is such use within either/both Art.5(1)(a) & Art 9(1)(a)
    • 3. If so, assuming use is detrimental to the distinctive character of the mark or takes unfair advantage, does it fall within Art5(2) & 9 (1)(c)
    • 4. Does it make a difference if presentation of the sponsored link in response to a search is liable to lead some members of the public to believe the competitor is a member of the TM proprietor’s commercial network OR
  • 30. And more UK questions
    • the search engine does not permit TM proprietors in the relevant member state of the Community to block selection of signs identical to their TMs as keywords by other parties
    • 5. Do any of the following constitute “ use” by search engine operators as per Art.5(1)(a) or 9(1)(a):
    • Present sign to user in search bars that contain a sponsored link to competitor site
    • Present a sign in summary of search results
  • 31. Yet more UK questions
    • Present sign as alternative suggestion when user enters a similar sign in search engine
    • Present search results page to user containing competitors sponsored link in response to user entering the sign
    • Adopt user’s use of sign by presenting user with search results page containing competitor’s sponsored link but that link does not itself include the sign or any similar sign
  • 32. And more…
    • 6. If is use for those purposes is it covered at all by the provisions of the E Commerce Directive regarding transmission, storage such that search engine operator is exempt from liability
    • 7. Can the competitor be held liable jointly under national law
  • 33. The likely outcome…….
    • The Court of Justice ruling will determine how far trade mark protection extends online
    • Impact on marketing budgets and strategies
    • Financial impact for Google – bulk of revenue derived from AdWords
  • 34.  
  • 35. Coffee break
  • 36. TAGlaw IP Conference Southampton 19 – 21 March 2010 BSkyB –v– EDS Lessons from an IT Project Disaster John Warchus – Partner, Clarkslegal LLP [email_address]
  • 37. Background
    • Request for a new CRM system
    • Timescales:
      • target date - March 2002
      • actual completion - March 2006
    • Costs:
      • budgeted cost - £50 million
      • actual cost - £265 million
      • legal costs - £70-80 million
  • 38. Background
    • Decision:
      • In favour of BSkyB for
        • fraudulent misrepresentation on timescales
        • negligent misrepresentation on project plan
        • breach of contract (failure to provide experienced personnel, deliver services in accordance with the contract, exercise reasonable skill and care)
    • Result:
      • EDS ordered to pay interim damages of £200 million by 17 February 2010, final damages likely to b higher
  • 39. Misrepresentation
    • Majority of claims dismissed
    • Fraudulent misrepresentation:
      • Court agreed that EDS had been fraudulent in claiming that the project could be completed within 18 months as it knew it had no grounds to make the claim
      • EDS intended BSkyB to rely on it
      • BSkyB relied on the representation and suffered harm
    • Effect of fraudulent misrepresentation
      • the liability cap (£30 million) was invalid and BSkyB is able to recover all damages which it can demonstrate
      • stinging criticism of the EDS MD (Joe Galloway)
  • 40. Misrepresentation
    • Negligent misrepresentation
      • court also accepted that there had been a negligent misrepresentation by EDS in representing that they “had a programme plan that was achievable and the product of proper analysis and re-planning”.
      • EDS had no reasonable grounds for such a representation, but EDS’ culpability was not as great as with regard to the misrepresentation on timescales.
  • 41. Breach of Contract
    • EDS held to be in breach due to:
      • failure to provide experienced personnel
      • failure to deliver the services/documentation in accordance with the contract
      • failure to exercise reasonable skill and care
    • Documentation/Evidence:
      • the Court was able to point to numerous minutes/emails which showed that EDS had had serious problems with resourcing the project, meeting contractual deadlines and only making minimal progress. The breach of contract finding was the result of the cumulative effect of these deficiencies.
  • 42. Breach of Contract
    • Repudiation
      • could BSkyB terminate in March 2002?
      • repudiation only possible if EDS indicated it would not follow contract or committed a breach going to root of contract
      • poor performance not sufficient per se to terminate
      • no repudiation where breach is less serious than that required in express termination clause
      • in addition, repudiation needs clear acceptance – none here
  • 43. Limiting Liability
    • the £30 million liability cap cannot apply to damages arising from fraudulent misrepresentation
    • Entire Agreement defence
      • could EDS use clause to avoid negligent misrep?
      • no - argument failed
      • wording excluded representations from the “contract” but did not mean they never existed
      • really explicit wording required to indicate that representations have been withdrawn, overridden or have no legal effect
  • 44. Limiting Liability
    • Settlement Agreement defence
      • clear wording in relation to settlement of contractual claims
      • silence as to tortious claims
      • failure to include tortious claims expressly was fatal – liability not excluded for negligent misrepresentation
  • 45. Limiting Liability
    • Memorandum of Understanding
      • signed in March 2002, EDS claimed it was binding and settled contractual claims
      • stated to be “without prejudice” and “subject to contract”
      • was part of MOU binding?
      • claim rejected: MOU not binding, as clearly inconsistent with parties’ intent/behaviour
  • 46. Damages
    • BSkyB’s claim:
      • induced into awarding the contract to EDS due to the misrepresentations and without these
      • it would have contracted with one of the other bidders (PwC) who would have
      • completed the project earlier
      • at a lower cost and
      • would have delivered IT benefits sooner
  • 47. Damages
    • Contractual damages:
      • court assessed that BSkyB was entitled to £52.8 million due to incurring that amount of cost over and above what it would have paid EDS to complete the project – but contract damages subject to the limitation cap of £30 million
    • Misrepresentation damages:
      • after extensive analysis, the Court accepted that BSkyB would have contracted with PwC who would have achieved go-live on 1 February 2005
  • 48. Damages
    • Mitigation
      • duty on innocent party to minimise loss
      • EDS claim that BSkyB failed to act reasonably
      • should BSkyB be judged as a systems integrator?
      • EDS claim rejected: delayed completion not per se evidence of “unreasonable” behaviour
      • key issue: was assuming the SI role reasonable?
      • step-in rights supported
    • Interim award of damages reported to be £200 million, suggesting that any final award is likely to be for a larger sum
  • 49. Implications for the IT Sector
    • Suppliers need to control bids
      • danger of the rogue salesman
      • better vetting of key employees
      • better ITT/Proposal analysis
      • tougher peer review/approval process
      • reducing risk by contract drafting
      • rewarding the sales team
      • higher bids/fewer bidders?
  • 50. Implications for the IT Sector
    • Actions for customers
      • check supplier references/key individuals
      • tougher analysis of the ITT – legal dilemma?
        • greater interest in supplier’s internal bid documents
      • attempts to invalidate all pre-contract representations?
        • check supplier’s terms
      • IT contract pricing - reinforcement of milestone approach, further undermining time and materials
      • an explosion of IT disputes?
        • special facts present
        • difficulty in showing fraudulent misrep/attacking limitation caps
        • cost and disruption of all litigation
  • 51. CV Details
    • John qualified in 1990 and has practised in City firms before joining Clarkslegal LLP as head of the Technology Law Team. He specialises in all aspects of IT and IP law including:
      • IT Services and Outsourcing Agreements
      • Software Development Projects
      • Pharmaceutical/BioTech Agreements
      • Protection and exploitation of all IP rights
      • Trade marks and branding
      • Dispute management and resolution
    • John’s clients span many sectors including Infrastructure, Technology and Retail and he has acted for ICL Fujitsu , Balfour Beatty, G4S , Mouchel and Asos.com .
    • He is recognised as a Technology Law expert in both the Legal 500 and Chambers directories.
  • 52. Contact
    • [email_address]
    • + 44 (0)118 953 3956
    • www.clarkslegal.com
  • 53. TAGlaw IP Conference Southampton 19 – 21 March 2010 BSkyB –v– EDS Lessons from an IT Project Disaster John Warchus – Partner, Clarkslegal LLP [email_address]
  • 54. Background
    • Request for a new CRM system
    • Timescales:
      • target date - March 2002
      • actual completion - March 2006
    • Costs:
      • budgeted cost - £50 million
      • actual cost - £265 million
      • legal costs - £70-80 million
  • 55. Background
    • Decision:
      • In favour of BSkyB for
        • fraudulent misrepresentation on timescales
        • negligent misrepresentation on project plan
        • breach of contract (failure to provide experienced personnel, deliver services in accordance with the contract, exercise reasonable skill and care)
    • Result:
      • EDS ordered to pay interim damages of £200 million by 17 February 2010, final damages likely to b higher
  • 56. Misrepresentation
    • Majority of claims dismissed
    • Fraudulent misrepresentation:
      • Court agreed that EDS had been fraudulent in claiming that the project could be completed within 18 months as it knew it had no grounds to make the claim
      • EDS intended BSkyB to rely on it
      • BSkyB relied on the representation and suffered harm
    • Effect of fraudulent misrepresentation
      • the liability cap (£30 million) was invalid and BSkyB is able to recover all damages which it can demonstrate
      • stinging criticism of the EDS MD (Joe Galloway)
  • 57. Misrepresentation
    • Negligent misrepresentation
      • court also accepted that there had been a negligent misrepresentation by EDS in representing that they “had a programme plan that was achievable and the product of proper analysis and re-planning”.
      • EDS had no reasonable grounds for such a representation, but EDS’ culpability was not as great as with regard to the misrepresentation on timescales.
  • 58. Breach of Contract
    • EDS held to be in breach due to:
      • failure to provide experienced personnel
      • failure to deliver the services/documentation in accordance with the contract
      • failure to exercise reasonable skill and care
    • Documentation/Evidence:
      • the Court was able to point to numerous minutes/emails which showed that EDS had had serious problems with resourcing the project, meeting contractual deadlines and only making minimal progress. The breach of contract finding was the result of the cumulative effect of these deficiencies.
  • 59. Breach of Contract
    • Repudiation
      • could BSkyB terminate in March 2002?
      • repudiation only possible if EDS indicated it would not follow contract or committed a breach going to root of contract
      • poor performance not sufficient per se to terminate
      • no repudiation where breach is less serious than that required in express termination clause
      • in addition, repudiation needs clear acceptance – none here
  • 60. Limiting Liability
    • the £30 million liability cap cannot apply to damages arising from fraudulent misrepresentation
    • Entire Agreement defence
      • could EDS use clause to avoid negligent misrep?
      • no - argument failed
      • wording excluded representations from the “contract” but did not mean they never existed
      • really explicit wording required to indicate that representations have been withdrawn, overridden or have no legal effect
  • 61. Limiting Liability
    • Settlement Agreement defence
      • clear wording in relation to settlement of contractual claims
      • silence as to tortious claims
      • failure to include tortious claims expressly was fatal – liability not excluded for negligent misrepresentation
  • 62. Limiting Liability
    • Memorandum of Understanding
      • signed in March 2002, EDS claimed it was binding and settled contractual claims
      • stated to be “without prejudice” and “subject to contract”
      • was part of MOU binding?
      • claim rejected: MOU not binding, as clearly inconsistent with parties’ intent/behaviour
  • 63. Damages
    • BSkyB’s claim:
      • induced into awarding the contract to EDS due to the misrepresentations and without these
      • it would have contracted with one of the other bidders (PwC) who would have
      • completed the project earlier
      • at a lower cost and
      • would have delivered IT benefits sooner
  • 64. Damages
    • Contractual damages:
      • court assessed that BSkyB was entitled to £52.8 million due to incurring that amount of cost over and above what it would have paid EDS to complete the project – but contract damages subject to the limitation cap of £30 million
    • Misrepresentation damages:
      • after extensive analysis, the Court accepted that BSkyB would have contracted with PwC who would have achieved go-live on 1 February 2005
  • 65. Damages
    • Mitigation
      • duty on innocent party to minimise loss
      • EDS claim that BSkyB failed to act reasonably
      • should BSkyB be judged as a systems integrator?
      • EDS claim rejected: delayed completion not per se evidence of “unreasonable” behaviour
      • key issue: was assuming the SI role reasonable?
      • step-in rights supported
    • Interim award of damages reported to be £200 million, suggesting that any final award is likely to be for a larger sum
  • 66. Implications for the IT Sector
    • Suppliers need to control bids
      • danger of the rogue salesman
      • better vetting of key employees
      • better ITT/Proposal analysis
      • tougher peer review/approval process
      • reducing risk by contract drafting
      • rewarding the sales team
      • higher bids/fewer bidders?
  • 67. Implications for the IT Sector
    • Actions for customers
      • check supplier references/key individuals
      • tougher analysis of the ITT – legal dilemma?
        • greater interest in supplier’s internal bid documents
      • attempts to invalidate all pre-contract representations?
        • check supplier’s terms
      • IT contract pricing - reinforcement of milestone approach, further undermining time and materials
      • an explosion of IT disputes?
        • special facts present
        • difficulty in showing fraudulent misrep/attacking limitation caps
        • cost and disruption of all litigation
  • 68. CV Details
    • John qualified in 1990 and has practised in City firms before joining Clarkslegal LLP as head of the Technology Law Team. He specialises in all aspects of IT and IP law including:
      • IT Services and Outsourcing Agreements
      • Software Development Projects
      • Pharmaceutical/BioTech Agreements
      • Protection and exploitation of all IP rights
      • Trade marks and branding
      • Dispute management and resolution
    • John’s clients span many sectors including Infrastructure, Technology and Retail and he has acted for ICL Fujitsu , Balfour Beatty, G4S , Mouchel and Asos.com .
    • He is recognised as a Technology Law expert in both the Legal 500 and Chambers directories.
  • 69. Contact
    • [email_address]
    • + 44 (0)118 953 3956
    • www.clarkslegal.com
  • 70. Australasian Issues 20 March 2010
  • 71.  
  • 72. New Zealand – Infringing File Sharing
    • s92A Copyright Act
    • ISP Liability
    • Australian Position
      • Roadshow Films v iiNet Limited
    Australia – Databases
    • Telstra Corporation Limited v Phone Directories Company Pty Limited
    • New Zealand Position
  • 73. Other Current Issues
    • Google Adwords in New Zealand & Australia
    • New Zealand Patents Bill
    • IPONZ & IP Australia Online
    • Domain Names
    • Madrid Protocol
  • 74. Lunch
  • 75. Product protection in UK 19 – 21 March 2010
  • 76. Topics in Community Design Law Presented by Robert Onslow Barrister © Robert Onslow 1
  • 77. Overall impression I
    • Art.6 CDR:
    • “ 1. A design shall be considered to 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:
    • (a) …”
    © Robert Onslow 2
  • 78. Overall impression II
    • Art 10 CDR:
    • “ The scope of the protection conferred by a Community design shall include any design which does not produce on the informed user a different overall impression.”
    © Robert Onslow 3
  • 79. Overall impression III
    • Legal fictions applied to constrain overall impression
      • Informed user
      • Prior art
      • Degree of freedom
      • Technical features
    © Robert Onslow 4
  • 80. Overall impression IV
    • Informed user
    © Robert Onslow 5
  • 81. Overall impression V
    • The overall impression conferred by a registered, as distinct from an unregistered design
    © Robert Onslow 6
  • 82. Technical designs I
    • Lindner Recyclingtech v Franssons [2010] ECDR 1
    • Multiplicity of forms
    • Every feature approach
    © Robert Onslow 7
  • 83. Technical designs II
    • Paton Calvert Housewares v Normann Copenhagen [2010] ECDR 3
    © Robert Onslow 8
  • 84. Publication I
    • For the purpose of applying Articles 5 and 6, a design shall be deemed to have been made available to the public if it has been published following registration or otherwise, or exhibited, used in trade or otherwise disclosed .... 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 Community.
    © Robert Onslow 9
  • 85. Publication II
    • Sector concerned = prior art sector
    • Green Lane v PMS [2008] FSR 28 CA
    • Ferrari Spa v Dansk Supermarked R84/2007
    © Robert Onslow 10
  • 86. Publication III
    • Reasonably have become known
    • Presumption, onus and evidence
    • Patent offices – official records
    • Manufacturing importance of the country of
    • Publication
    • Trade fairs – level of attendance
    • Newspapers and magazines – readership
    © Robert Onslow 11
  • 87. QUESTIONS ? © Robert Onslow 12
  • 88. Patents for Software and Business Related Inventions Ian Harris March 2010
  • 89. Overview
    • Europe
    • USA
    • Conclusions
  • 90.
    • The EPO provides a centralised mechanism for the prosecution of patent applications in Europe under the European Patent Convention (EPC)
    • First instance:
      • Search, Examination and Opposition Divisions
    • Second instance:
      • EPO Boards of Appeal
    • Enlarged Board of Appeal
    European Patent Office (EPO)
  • 91. EPC: Criteria for patentability
    • There must be an "invention" which is
      • novel (Article 54 EPC)
      • inventive (Article 56 EPC)
      • industrially applicable (Article 57 EPC)
  • 92. But what is an "invention”?
    • Article 52 EPC
    • 1) " European patents shall be granted for any inventions, in all fields of technology ...”
    • 2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1:
      • (a) discoveries, scientific theories and mathematical methods;
      • (b) aesthetic creations;
      • (c) schemes, rules and methods for performing mental acts, playing games or doing business , and programs for computers ;
      • (d) presentations of information.
    • 3) The provisions of paragraph 2 shall exclude patentability of the subject-matter or activities referred to in that provision only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such .
  • 93. The need for technical features
    • Rule 43 (1) EPC: "The claims shall define the matter for which protection is sought in terms of the technical features of the invention. Wherever appropriate, claims shall contain:
      • (a) a statement indicating ... those technical features which ... form part of the prior art
      • (b) a characterising portion ... specifying the technical features for which, in combination with the features stated under sub-paragraph (a), protection is sought.
    • Rule 42(1)(c) EPC: The description shall ... disclose the invention, as claimed, in such terms that the technical problem, …, and its solution can be understood, and state any advantageous effects of the invention with reference to the background art."
  • 94. Technical character
    • Solution to a technical problem
    • Achieves a technical effect
    • Technical interactions occur
    • Technical considerations must be applied
    • Uses technical means for a non-technical purpose
    • May be better to think “technological” rather than “technical”
  • 95.
    • Allowed claim:
      • “ A method of digitally processing images in the form of a two-dimensional data array having elements arranged in rows and columns …. the method includes repeated cycles of sequentially scanning the entire data array with a small generating kernel operator matrix to generate a convolved array …”
    • Original claim:
      • “ A method of digitally filtering a data array …”
    T 208/84 Image processing/VICOM
  • 96. T 163/95 Colour TV Signals/BBC
    • “ A colour television signal adapted to generate a picture with an aspect ratio of greater than 4 : 3, and in which the active-video portion of a line constitutes at least 85% and preferably 90% of the line period.”
  • 97. T 935/97 Computer program product/IBM
    • A computer program product comprising a computer readable medium, having thereon: computer program code means, when said program is loaded, to make the computer execute procedure to...
    • A computer program element comprising: computer code means to make the computer execute procedure to …
    • A computer program element ... embodied on a computer readable medium
    • A computer readable medium, having a program recorded thereon ...
  • 98. Computer program product claims
    • There has to be a (further) technical effect at some point:
      • in T 935/97, arranging info on screen so that overlapping windows can each still be read
      • in T 1173/97, resource recovery if a commit procedure for initializing an application fails
    • Has to have the potential to produce a technical effect
  • 99. T 641/00 Dual Identity/COMVIK
    • Method in a [GSM] telephone system …in which subscriber units are controlled by a SIM, characterised in that
      • the SIM is allocated at least two identities, ... said at least two identities being selectively usable, wherein only one identity can be activated at a time, …wherein the selective activation is used for distributing the costs for service and private calls or among different users”
    • Inventive step needs technical features
    • Problem and solution approach
    • The problem must be a technical problem
  • 100. T 258/03 (1) Auction method/Hitachi
  • 101. T 258/03 (2) Auction method/Hitachi
    • Client-server setup for a Dutch auction.
    • Problem: what to do if there are 2 competing bids at current price
    • Solution: up the price until all but one bidder is excluded
    • Examining Division:
      • “ it would be formalistic to make a distinction … between claims of different categories
    • Board of Appeal:
      • “ ... the apparatus of claim 3 is an invention … since it comprises clearly technical features …”
    • Reasoning independent of claim category
  • 102. G 3/08: Referral to Enlarged Board
    • History:
      • Criticism of EPO practice by Jacob L.J. in Aerotel/Macrossan
      • Request that questions be referred to Enlarged Board
      • Last EPO President (Pompidou) refuses
      • Current EPO President (Brimelow) refers questions to Enlarged Board
  • 103. G 3/08: Referral to Enlarged Board
    • However:
      • the questions do not address the core of the EPO approach
      • no mention of T 641/00 (COMVIK)
      • focus on IBM "program product" cases
      • no real exploration of business method problems
  • 104. UK Situation (1)
    • UKIPO uses four-part “Macrossan Aerotel” test:
      • (1) properly construe the claim
      • (2) identify the actual contribution;
      • (3) ask whether it falls solely within the excluded subject matter;
      • (4) check whether the actual or alleged contribution is actually technical in nature
    • In principle the approach sounds OK, but UKIPO examiners tend to reject software implemented inventions that the EPO would grant
  • 105. UK Situation (2)
    • Court of Appeal found against the UKIPO in the Symbian case
    • Nevertheless the UKIPO continues to apply the so-called Aerotel/Macrossan approach
    • Practical experience shows that the results of the way the UKIPO applies the Aerotel/Macrossan approach does not provide the same results as the EPO approach
  • 106. USA - Statutory Basis
    • 35 U.S.C. § 101: A patent can be obtained for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof …”
    • 35 U.S.C. § 100(b): “The term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”
  • 107. US - Supreme Court
    • “ Anything under the sun that is made by man.” Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980).
    • NOT: abstract ideas (e.g., mathematical algorithms); natural phenomena; laws of nature. Gottschalk v. Benson, 409 U.S. 63, 67 (1972).
  • 108. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)
    • The Machine-or-Transformation Test
      • A process is patentable under § 101 only if:
      • (1) it is tied to a particular machine or apparatus, or
      • (2) it transforms a particular article into a different state or thing
    • Corollary #1: Meaningful limitation of claim
      • “ use of a specific machine or transformation of an article must impose meaningful limits on the claim’s scope to impact patentability”
      • “ mere field-of-use limitations are generally insufficient to render an otherwise ineligible process claim patent-eligible
    • Corollary #2: More than insignificant extra-solution activity
      • “ involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity”
  • 109. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)
    • Machine-or-Transformation Test
      • Transformation prong:
        • Must be central to the purpose of the invention
        • Must transform "physical objects or substances"
        • Not: legal obligations, organizational relationships, business risks
        • Maybe: electronic transformation of data representing physical objects
      • Machine prong:
        • Open question: whether reciting a computer sufficiently ties a process to a particular machine
  • 110. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)
    • 1. A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:
    • (a) initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
    • (b) identifying market participants for said commodity having a counter-risk position to said consumers; and
    • (c) initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.
  • 111. In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)
    • Federal Circuit (en banc)
      • affirmed USPTO’s § 101 Rejections
      • Machine Prong:
        • applicant admitted no machine was involved
      • Transformation Prong:
        • claims do not transform or represent physical objects or substances;
        • at best, refer to transformation of legal obligations or relationships, business risk, and other abstractions
  • 112. Bilski v. Kappos at the Supreme Court
    • U.S. Supreme Court is now reviewing Bilski decision
    • Petitioners’ Opening brief filed July 30th
    • Machine-or-transformation test conflicts with Supreme Court precedent holding that patentable subject matter is broad and flexible
    • Decision conflicts with Patent Act’s definition of business method patents
    • Machine-or-transformation test disrupts settled expectations and calls into question tens of thousands of issued patents
    • Supreme Court decision expected Spring 2009
  • 113. Summary - US v. Europe (1)
    • US
      • Bilski - Machine-or-Transformation Test
      • Fit claims within statutory categories
    • Europe
      • “ Technical” (“Technological”)
      • Avoid exclusions
      • Problem and solution
  • 114. Summary - US v. Europe (2)
    • Basic patentability
      • US has traditionally been more permissive on patentability (but changed post-Bilski)
      • EPO generally more restrictive on patentability
    • Claim formats
      • EPO generally more flexible on claim forms
      • (e.g., signals, software without medium)
    • Description
      • US – written description
      • EPO – need support for “technical”
  • 115. Final thoughts
    • Inventions implemented using software or as part of a business method are patentable
    • European problem and solution approach can be valuable to assess inventions
    • But you need to prepare patent applications to suit the jurisdiction
    • Important to have enforceable claims and a description that brings out the technological basis for the invention
    • Forum shopping in Europe for enforcement is important
  • 116. Discussion
    • Questions?
    • Thank you for listening
  • 117. Tea break
  • 118. The Frogeye Sprite - a case study in practical intellectual property Geoffrey Sturgess +44 (0)1865 253284 [email_address]
  • 119.  
  • 120.  
  • 121.  
  • 122. Exercise
    • 1. Consider the (genuine) facts
    • 2. Consider the legal situation in your own jurisdiction
    • 3. Discuss
  • 123.  
  • 124. Open forum Over to you
  • 125. TAG IP conference 19 – 21 March 2010