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Intellectual Property Problem Questions

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Problem Question

Gavin has just purchased a container-load of T-shirts featuring Homer, Marge, Bart, Lisa, and Maggie, characters from the American animated television sitcom, "The Simpsons" from Kevin in London. Kevin assured Gavin that the T-shirts were produced under licence from Fox Broadcasting Company, the US-based producers and owners of copyright in the characters depicting the show’s eponymous family. Gavin is very sceptical of Kevin’s assurances because of the latter’s penchant for copyright infringements and several previous copyright-related offences and convictions. However, due to huge demands for the Simpsons’ T-shirts in the run-up to the show’s 20th anniversary, Gavin plans to sell the T-shirts anyway, resolving to rely on Kevin’s assurances should he be challenged by the copyright owners.

Will Gavin be infringing copyright? Or has he already infringed copyright? Would Gavin’s position be different if the copyright owners notified him about their copyright in the animated characters, after Gavin had sold some, but not all of the T-shirts? What are the possible remedies available to the copyright owners should Gavin be deemed a secondary infringer? What sort of remedy could Gavin resort to in order to recoup his loss?

Answer Plan

This question requires the student to have a good grasp of relevant provisions of copyright legislation and case law on circumstances when secondary infringements could take place, the crucial role of the mental state of the alleged secondary copyright infringer, the remedies available to copyright owners, and the legal fate of the alleged secondary copyright infringer.

Suggested Answer

The scenario depicts in the question deals with a situation of secondary infringing acts and the mental element needed for secondary infringement, assuming all the acts take place within the United Kingdom. We learnt that Gavin bought the T-shirts off Kevin in London, so Gavin would not be a primary infringer if Kevin was lying and had no permission of the copyright owners as he claimed. However, Gavin could potentially be committing the secondary infringing acts of keeping (in the course of business), offering and exposing for sale (in his stall), and selling the T-shirts. These acts are prohibited by section 23 of the Copyright, Designs and Patents Act, 1988.

In order for Gavin to avoid liability for possible secondary copyright infringement, he has to show that from the facts, he has no knowledge or reason to believe that the T-shirts he bought from Kevin infringe Fox Broadcasting Company’s copyright in the Simpsons characters. See section 23 of the Copyright, Designs and Patents Act, 1988.

The pertinent question therefore is whether Gavin has the requisite knowledge? We have to look at the scenario for clues. From the facts, he seems to know that the Simpsons characters are protected by copyright. However, does Gavin truly believe that Kevin was an official licensee of copyright in the Simpson characters? He is well aware of Kevin’s notorious previous copyright infringements and convictions. But could Gavin’s knowledge of Kevin’s habitual copyright infringements be enough to ground the claim that he knows or has reason to believe that the Simpsons T-shirts are infringing?

In Pensher Security Doors Co Ltd v. Sunderland City Council [2000] RPC 249, the Court of Appeal approved the distinction between knowing facts that give rise to a mere suspicion and facts that provide a reason to believe. If Gavin could establish that his knowledge of Kevin’s previous copyright breaches gives him no more than mere suspicion that the Simpsons’ T-shirts could be infringing, then on the authority of Pensher Security Doors Co Ltd, he could escape liability for secondary copyright infringement. However, if the Court believes to the contrary, and affirms that Gavin’s knowledge of Kevin’s previous copyright infringements should have made him to know or give him a reason to believe that the Simpsons’ T-shirts are indeed infringing, then Gavin could be liable for secondary copyright infringement. Given the facts, it would appear that Gavin would find it very difficult to establish that the facts give him no more than mere suspicion, and the court, in the circumstance, would most likely find that there was sufficient evidence to support that Gavin had knowledge or a reason to believe that the T-shirts were infringing.

Moreover, if the owners of copyright in the Simpsons’ characters had written Gavin directly or through their solicitors that the T-shirts were not official and were infringing, Gavin would thereafter be deemed to have knowledge about the infringing T-shirts and would, without doubts, be regarded as a secondary copyright infringer from there on. Significantly at this point, the question of whether Gavin has knowledge or mere suspicion that the T-shirts are infringing would become moot.

Also, from this point on, Gavin will not be able to legally dispose of the unsold stock, and the copyright owners could ask for an order of court that the unsold stock be delivered up to them for detention as provided for respectively under sections 99 and 100 Copyright, Designs, and Patents Act 1988 on order for delivery up and right to seize infringing copies by copyright owners.

Obviously, an order for delivery up or seizure of unsold stock would leave Gavin out of pocket. So what can he do? He has no remedy under the copyright law against Kevin, but he could sue Kevin for a breach of implied term of their contract that Kevin had title to the T-shirts and that the T-shirts were legally sold.

Problem Question

Whilst on holiday in Marrakesh Morocco, Jane purchased 600 Radiohead CDs, which were on sale at a very low price. She brought them back to home in London in order to sell them to friends and acquaintances at a profit, which she did. However, unknown to her the CDs were fake.

(a) Has she infringed copyright and if so, how and when?

(b) Would her position be different legally if she had purchased the CDs in Germany?

(c) Would her position be different if in either of the above situations, the CDs were genuine ones produced by Radiohead’s record company for distribution in Morocco and Germany?

Answer Plan

This question deals with the legal issues raised by Jane’s importation of infringing fake music CDs from outside of the EU into the UK. The question is primarily intended to test students’ knowledge of the EU as a single jurisdiction and market for copyright works vis-à-vis countries outside the EU. This distinction is useful for determining when parallel importation (an infringing activity) takes place, the nature of the infringing activity of the importer of works subject to copyright protection, as well as remedies available to copyright owners.

A useful starting point is to examine the copyrights that exist in a typical music CD that would be owned by the Radiohead or their record company. The next logical step should then focus on examining at what stage Jane commits an infringing activity under the Copyright Act 1988, the implications of purchasing the fake CDs from Germany as opposed to Morocco, and what her legal position would be if the CDs were not fake, but were first sold into Moroccan and German markets by Radiohead or their record company prior to Jane’s purchase.

Suggested Answer

There are clearly a number of copyrights that typically exist in a music CD. These include (a) musical works (basic tune plus arrangement), (b) lyrics, (c) sound recording, (d) compilation (selection and ordering of tracks-probably as a compilation rather than database) and (e) sleeve artwork. A good fake will infringe all these copyrights.

At what stage does Jane commit an infringing act under the Copyright, Designs and Patents Act 1988?

Infringing acts must take place within UK jurisdiction. Therefore, it is the stage at which Jane imports Radiohead’s music CDs into the UK that the infringing acts take place. However, under section 22 of the copyright Act 1988, in order for Jane to commit an infringing act by importation of the CDs into the UK, she must know or has reason to believe that the CDs are infringing copies. Under section 27 of the Copyright Act, the CDs are by law, infringing copies because they are not genuine. This takes us right back to the question of knowledge that we earlier deal with in Gavin’s case in question 2 above. Invariably, proving whether or not Jane has knowledge or reason to believe that the music CDs she bought in Marrakesh were fake, would depend on the factual circumstances such as the price she bought them at, whether there are any tell-tale signs that the CDs were fake, etc. The bottom line Jane could be liable for secondary copyright infringement for importing those CDs into the UK.

Is Jane also a primary copyright infringer?

Yes, it will appear so by virtue of section 18(2) & (3) of the Copyright, Designs and Patents Act 1988, which makes Jane an issuer by placing infringing copies of Radiohead CDs on the market in the European Economic Area (EEA) for the first time. Note that unlike secondary infringement, there is no mental element qualification to primary infringement. Therefore, even if she escapes liability for secondary copyright infringement on account of requisite knowledge or reason to believe that the CDs are not genuine, she will not escape liability for primary infringement.

Would her position be any different if she had purchased the music CDs in Germany?

If she had purchased the CDs in Germany, she would not be an issuer or primary copyright infringer under section 18 of the Copyright Act, because the CDs have already been imported into and issued in Germany, which is part of the EEA, by the person/s she from whom she bought the CDs.

What if the CDs she imported from Morocco were genuine copies produced by Radiohead’s record company for distribution in Morocco?

If the CDs were not fakes, then they are not ‘infringing copies’ within the meaning of section 27 of the Copyright Act, 1988. Therefore, Jane will not be liable for secondary copyright infringement. However, she may still be liable for primary copyright infringement under section 18 for importing from Morocco and issuing or placing the music CDs on the market within the EEA. Section 18 does not require copies issued to be unlawful copies, and will apply even to official copies. Jane’s importation of the CDs from Morocco into the UK will amount to parallel importation. Although the CDs are official copies, Radiohead’s or their record company’s rights are not exhausted for copies they placed or issued in Morocco or anywhere outside of the EEA.

On the other hand if she had brought in the lawful copies into the UK from Germany, she would not be infringing any copyright, as Germany is within the EEA and part of the single market.

Problem Question

Discuss whether the following invention by Healthfirst Pharmaceuticals Company would be patentable (subject to questions of novelty, obviousness and internal validity?)

Healthfirst Pharmaceuticals Company has identified the genes, present in most mammals, which are responsible for many aspects of the ageing process. By modifying these genes the company is able to create and breed pigs that show human-like signs of ageing such as wrinkling skin, reduced reaction time, and dementia at an accelerated rate over the lifespan of the animal. (Normally pigs show different ageing signs before the end of their natural life.) The company chose the pig rather than other animals as pigs are physiologically similar to humans. It hopes to sell these pigs for use in experiments into treatments for ageing process in humans and animals, cosmetics, etc.

Answer Plan

This question raises a number of issues regarding the modification to the genetic identity of animals that are addressed in the Biotech Directive. A useful starting point is to identify the basic principles on the patentability of genes discovery, and then go on to discussing further qualifications under the Biotech Directive.

Suggested Answer

As a general rule, a mere discovery of a gene is not a patentable invention because it is not capable of industrial application under section 1(1) (c), and it is excluded under section 1(2) (a) of the Patents Act, 1977. The pertinent question is whether Healthfirst’s invention is caught by these provisions? In order to answer this question, it is necessary to examine what exactly the company claim to have invented. Healthfirst seems to have discovered how ageing genes work. The company reached this conclusion by identifying and isolating the gene, identifying what the gene does, and figuring out how to modify the gene’s behaviour to produce something useful from it: a laboratory animal (pig) which ages like humans. It is clear from the foregoing analysis that Healthfirst’s research efforts go beyond merely discovering a gene. The company actually makes an invention (pigs) which appear to be new and are clearly capable of industrial application.

Because the invention involves genes, we need to apply the provisions of the Biotech Directive as stated in Schedule A2 of the Patents Act 1977, and refer to the Directive where necessary.

Also, because the invention involves animals, and a way of producing animals, we need to first consider paragraph 3(f) to Schedule A2 of the Patents Act 1977, which forbids the patenting of traditional biological processes for the production of animals. It is clear from the evidence that Healthfirst used a microbiological process and not biological processes therefore their invention will be patentable.

A potential obstacle to Healthfirst’s invention is paragraph 3(e) to Schedule A2 of the Patents Act 1977. It forbids processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes. This provision is meant to implement the general ideas of the first decision in Harvard/Onco Mouse [1990] EPOR]. The pertinent question is whether this invention is caught by this provision? It is not clear from the facts presented here if the laboratory experiments for modifying the pigs’ ageing process cause or will likely cause them any suffering. If this is the case, then there must be substantial medical benefits to humans or animals in order for the invention to be patentable. The next logical question is whether from the facts, there are any medical benefits? Yes, there are medical benefits, as the invention can be used to treat dementia in humans. The fact that it can also be used in cosmetics will not diminish its medical benefits potentials, and will be patentable.

Other possible legal obstacle to the invention is the general "order public" or morality objection under section 1(3) of the Patents Act. However, it is not an issue in this case, and need not be discussed.

2. James is a biochemist working for Beautyfirst Cosmetics Ltd, a London based company that specialises in beauty products and cosmetics. James is also a keen amateur football player. Recently, after a football game, he was examining the ingredient list on the bottle of liniment he uses to ease his aches and pains. He was amazed to find that one ingredient was the same as an active ingredient of a cream for treating skin wrinkles, which he was working on in the laboratory. He has been having a problem delivering the active ingredient to skin membrane. When he returned to his lab, he tested the liniment, and used it to deliver the active ingredient across skin membrane very effectively. James now believes that a composition based on the skin liniment recipe would be an effective anti-wrinkle cream.

Problem Question

Can James patent the cream and what exactly could it claim?

Answer Plan

The issue raised in this question deals primarily with the problem relating to getting a patent for a new use for a known compound or product. This problem was dealt with by the Enlarged Board of Appeal of the EPO in G2/88 Mobil Oil III/Friction Reducing Additive [1990] OJEPO 93, and G6/88 Bayer/Plant growth regulating agent [1990] OJEPO 114. The first step is to identify the nature of James’ invention and examine whether he could apply for a national patent in the UK or to the European Patent Office (EPO).

Suggested Answer

The active compound in James’ claimed invention is from an existing compound which has been previously used in the liniment for aches and pains. James has now found a new use for this old compound: an anti-wrinkle cream. In the UK, it’s a longstanding principle of novelty that no one could get a patent for merely ascertaining the properties of a known substance. (IG Farbenindustrie AG’s Patents (1930) 47 RPC 289 at 322.) Thus in Bayer AC (Meyer’s) Application [1984] RPC 11, a claim to compound X for use in combating medical condition Y was refused because compound X was already known as a therapy.

In order to circumvent this principle, and allow patents claims for second medical use, a method of claim known as the Swiss-type claims was devised. The Swiss method generally refrains from claiming the product, but will rather claim a new method of using a known material. This was upheld by the enlarged Board of Appeal in G05/83 EISAI/Second Medical Indication. The new section 4A (3) and (4) of the Patents Act 1977 as amended, has now incorporated this reform into the UK law.

In light of the above analysis, James should be able to get a patent for his invention in the UK provided his invention is for a second medical use, and he frames the claim in such a way as to focus on the new method of using the compound, rather than the compound itself which obviously is not new. The only problem with such a patent is that it will be difficult to enforce. James cannot prevent people from using the existing liniment for aches and pains, which contains the active ingredient in his patent.

The EPO has taken the Swiss-type claim exception beyond medical uses into the realm of all types of technology in cases such as Mobil Oil III/Friction mentioned above, although UK courts are reluctant to follow suit. So even if James’ invention is not accepted as a medical invention, he could apply for an EPO patent provided the claim is appropriately framed as mentioned above. Again, the problem of enforcement won’t go away. EPO does not enforce patents, only national courts do. Thus, while James could end up getting a UK or EPO patent for his invention, it is one which is potentially unenforceable, because he can’t stop people using existing products which contain the active ingredient of his patent.

Problem Question

List and briefly outline the different types of protection that exist (or might exist) for designs created since Wednesday 6th March 2002 in the UK.

Answer Plan

This question requires students to discuss the four types of protection for designs in the UK: These are copyright, UK unregistered design right, registered designs and EU unregistered design protection.

Suggested Answer

Copyright Protection of designs

The first type of design right is the one conferred by copyright. Copyright work will often be a drawing (graphic work, artistic quality is irrelevant) but could be a model or mock up if protected by copyright as a sculpture, work of artistic craftsmanship or, in the case of flattish things, engraving.

In order to establish infringement, copying will have to be alleged; usually direct copying that may involve 2D to 3D conversion or vice versa.

Limitations on using copyright to protect designs

The first limitation is the defence under section 51 of the Copyright Act 1988. It provides that it is not an infringement of copyright in a design document or model recording or embodying a design for anything other than an artistic work or typeface to make an article to the design or to copy an article made to the design.

The second limitation is section 52 (2) of the Copyright Act 1988, which sets the duration of copyright designs protection at 25 years. This is in contrast to the standard life plus 70 years duration granted by section 12 of the Copyright Act to authors of literary, dramatic, musical, or artistic works.

UK unregistered designs right.

The second type of designs right is the one conferred by the UK unregistered designs provisions under sections 231 to 247 of the Copyright Act. The following are the key features of the type of protection conferred by the UK unregistered design right.

First, the right protects the shape and configuration of an article not including surface decoration from being copied. See generally section 231 of the Copyright Act 1988. Second, the right only protects original designs (section 213 (1)), third, there is no technical requirements for a "work" to be involved as required by copyright protection for designs. Therefore, a rough mock up like in Hensher v. Restawile Upholstery (Lancs) [1976] AC 64 would give rise to UK unregistered design right. Forth, the right protects functional designs just as well as aesthetic ones, though exclusions may apply, i.e., (must fit, must match), section 231 (3) (b) (i) (ii), fifth, there is no "dictated by function exclusion", and sixth, a UK unregistered designs only last 15 or 10 years, see generally section 216 of the Copyright Act 1988.

Registered designs right

This is the third type of designs right conferred in the UK. It may be obtained from a national Designs Registry in Europe or from OHIM Office in Alicante, Spain. Both national and Alicante offices require that the same basic requirements be satisfied for protection.

The following are the key features of the UK/EU registered designs right: First, appearance of a product is protected, and this can include surface decoration, colour, etc. Second, interfaces (must fit) and things dictated by technical function are excluded from registered designs right. Third, only new designs are protected, plus they must have individual character. The test for novelty is an objective test. Fourth, a registered design right must be applied for, and sixth, a registered design right can last up to 25 years from application. See generally sections 1-47A of the Registered Designs Act 1949 for detailed provisions protecting registered designs right in the UK.

EU unregistered design right

This is the fourth type of designs right that could be applied for in the UK and across national designs registries in the EU. It should be considered as a non-registered version of UK/EU registered designs discussed above.

The following are the key features of EU unregistered designs right: First, it only confers an anti-copying right and not a monopoly right, second, it only lasts for t3 years from the date the products were first marketed, and third, novelty and individual character etc, are required.