– NOTES FROM THE 27TH ANNUAL IP LAW AND POLICY CONFERENCE 2019 AT FORDHAM IP INSTITUTE
Here is a synopsis of my private notes and understanding from my rapt following of the sessions I attended at the Fordham IP Institute Conference held in New York City on 25 & 26 April 2019. The conference has been dubbed the Davos of IP and has a legitimate claim to hosting exactly that sort of leadership event for the policymakers, judges, academics and engaged practitioners of the global IP industry. All held under the influential hand of the irreverent Prof Hugh Hansen who clearly has the power to assemble the Who’s Who of World IP in a room, and the fearless humour to brazenly roast his distinguished panels and audience, whilst keeping the clock ticking like a time bomb at 7 minutes per presentation. Each session was as enlightening as the next. And, due to the strict time constraint and depth of panel composition, each presentation delivered crisp, focused views going plainly to the heart of each issue.
My notes skim the surface of this conference only and reflect my personal interests. They are arranged as my own Top Ten Take-Aways, being those topics and views that I will remember best, and plan to save for future analysis.
The index of my Top Ten Take-Aways comprise:
i) USA PATENT SYSTEM IN DIRE STRAITS?
ii) MULTILATERALISM IS DEAD, LONG LIVE MULTILATERALISM!
iii) REVIVAL OF EXHAUSTION IS DUE
iv) ONWARDS AND UPWARDS FOR ICONIC BRANDS
v) COPYRIGHT ON THE REBOUND
vi) INTERNET SERVICE PROVIDERS AND THE FUTURE OF THEIR SAFE HARBORS
vii) BRAND EQUITY IS STORYTELLING
viii) IP AND ANTITRUST BURY THE HATCHET
ix) THE CHANGING ROLE OF IP LAWYERS AND INSTITUTIONS
x) LIVESTREAM BLOCKING MECHANISMS GET FLEXIBLE
1. USA PATENT SYSTEM IN DIRE STRAITS?
a) Where Did Patent Injunctions Go?
Overall patent lawsuits in the USA have been going down in the last 10 years, while injunctions had remained steady. But in the past year they “dropped off a cliff”, said David Kappos (former director of the US Patent and Trademark Office), pointing out a recent downward trend in both permanent and preliminary patent injunctions.
Fingers are pointed at cases like eBay v. MercExchange (where the US Supreme Court unanimously decided in 2006 that a patent injunction should not be automatically issued where there is patent infringement) and Apple v. Samsung which called for a “causal connection” between the harm and the patented features. There must be demand for the patented features AND these must be “important drivers of consumer demand for the infringing products” before a permanent injunction will be granted.
In the EcoServices-case the court required the patentholder to tie lost market/sales to the infringement, but there may be other competitors in the marketplace, making this very difficult for the patent holder to do.
In Verinata Health v. Ariosa Diagnostics, the patent was valid and infringed, but there was no irreparable harm because no direct competition existed between Plaintiff and Defendant.
Concluding from cases like these, US District Courts are finding every reason to deny patent injunctions these days. There is concern that a “blatant disregard for the law” is developing in the US patent system. What remains of the exclusive right which a patent provides if injunctions follow its infringement only with great difficulty?
b) The High Price of Medicines
The biopharma industry has long been under increasing pressure to lower the prices of medicine. Fewer patents are being filed for small molecule therapeutics (e.g. pills) than for large molecule therapeutics (e.g. intravenous drugs). Several bills are pending to put the US government in position to control prices, including: Preserve Access to Affordable Generics and Biosimilars Act (a bill to prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market, introduced on Jan 9, 2019), Medicare Negotiation and Competitive Licensing Act (to allow Medicare to negotiate prices directly with pharmaceutical companies and to authorize generic competition when negotiations fail, introduced on July 25 2018), and Prescription Drug Price Relief Act (to establish a series of oversight and disclosure requirements relating to the prices of brand-name drugs, specifically requiring the Department of Health and Human Services to review all brand-name drugs for excessive pricing annually, introduced by Bernie Sanders on Jan 10 2019).
Bryan Zielinski, chief patent counsel for Pfizer, pointed out that the value of a patent is to be an incentive for innovation and development. The period of real patent exclusivity ends up being only around 12 years nett, after its development and regulatory approval.
c) Patent Eligibility Requirements in Limbo
Andrei Iancu (director of the USPTO) discussed section 101 of the Patent Act (patentable subject matter) and pointed out that what is or isn’t patentable must be fixed. Since 1793 the US patent statute hasn’t changed much. However, recent case law has created significant confusion. “The current predicament is not caused by the legislation, but by a new interpretation by the judiciary”, he said. “They must fix it, but there is no evidence that they want to yet.” Section 101 judicial exceptions say what is not patentable per se (i.e. printed matter, naturally occurring articles, scientific principles and maths, natural principles, human interactions, and mental processes). Mistakes are being made by the judiciary in the application of these basic principles. The judiciary is applying exceptions not found in the statute itself. For example, considering claims under section 101 (patent eligibility) for inventiveness/newness (which is a separate matter under section 103) is a mistake.
The former chief judge of the US Court of Appeals for the Federal Circuit, Paul Michel, is concerned that the US Supreme Court is treating patent law as if it is not commercial, as if it is not subject to government agencies, scientific principles and as if it does not concern dealings between private parties. The Supreme Court is in “‘a deep trap”, and its results are counterproductive and creates uncertainty through “inconsistent, unexplainable results”. The Federal Circuit sitting en banc could solve about a quarter of the problem only. Resolution through legislation is what’s needed. The US Supreme Court has the whole country “completely trapped”. Inventors and investors are going abroad where the risks are lower. “Congress should specifically overrule the last four US Supreme Court cases which Justice Kennedy called exceptions which are ‘statutory stare decisis’! The patent system is entirely statutory. It is not subject to constitutional interpretation at all. It is commercial. The US Supreme Court is not democratic.”
Judge Michel predicts a new statute to be enacted during the next 4 years, which won’t be perfect, but which will be a huge improvement to stop the flight of talent, investment and jobs. “The status quo is untenable, unworkable”, Mr Iancu agrees. “We are on the cusp of the Fourth Industrial Revolution, and the US should not lose its leading edge. Congress must see to that.”
d) Unfair Bad Rap
Sir Robin Jacob, when asked during the Judges’ Panel which IP right was faring worst, replied that patents are the IP rights in most trouble today. Why do patens have such a bad image, and other IP rights have a good one? “Patents get beaten up all the time just because they protect new things!”, he concluded.
Paul Michel during the same session opined that the innovation eco-system has become politicized (lobbyists, propaganda). Discussions should be about facts rather than propaganda (e.g. high drug prices). He pointed out that there are no weak/bad patents. A patent is either valid or invalid. The problem is that patent people are not facing what the lay people think is a problem. For its next move the system must take care not to over- or under correct the patent system.
2. MULTILATERALISM IS DEAD, LONG LIVE MULTILATERALISM!
Twenty-five years after the adoption of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Law (TRIPS), it is still the only multilateral agreement dealing with IP and setting basic threshold standards for which member countries’ legislation must cater. But since the heyday of TRIPS and the WTO, action has shifted to plurilateral and bilateral agreements (which include intellectual property chapters). The international IP system is seemingly growing less harmonized and more fractious. Antony Taubman (director of IP at the WTO) says that member countries have built “the hardware” (their TRIPS compliant laws), but now developing countries want to know how to make these laws work – they are looking for “the software” next.
A more mature take has developed on what the public interest in IP is. What must be our innovation policies, our e-commerce policies, and how do we get our well-educated youth into productive employment? He said that nobody has really looked yet at Part III of TRIPS, which deals with enforcements of IP rights. What are the thresholds? How do we fly this thing?
As far as dispute settlement goes, the developing world’s fear of harassment hasn’t come to pass. Legitimate expectations of parties to TRIPS are reflected in the text of the agreement itself. TRIPS is flexible, adaptable and responsive to changing needs. 138 countries have given legal notifications of TRIPS compliancy, yet there is enormous divergency. “TRIPS articulates the ‘should’ of IP”. The TRIPS Council is emerging as a forum for policy norms.
Maria Martin-Prat, director in the European Commission DG for Trade, asked whether the current state of IP is going toward convergence, divergence, or whether we are managing diversity. She is of the view that the time of big multilateral IP treaties is over, but that this does not necessarily mean divergence. Bilateral trade agreements continue, but they are creating more divergence and less convergence.
This is a worrying trend for global trade, for example the differences between US and EU regarding publishers’ rights and the liability of Internet Service Providers. These differences affect stakeholders across many jurisdictions. Bilateral and plurilateral agreements at international level sees us going toward diversity, and such negotiations on trade and investments will affect our IP rules.
Trade-relatedness has moved to the forefront in IP these 25 years. There has been an emergence of trade in IP itself such as wasn’t foreseen 25 years ago. The App economy being an example. When IP exports are measured, the US has a massive surplus. US IP exports were near to $128 billion, versus imports at just over $ 48 billion. This is trade in IP itself.
While Multilateralism is trying to hold its head above the fragmentation of bilateralism, more informal yet effective international cooperation is taking place, such as cooperation directly among judges deciding IP cases in their WhatsApp chat groups. Annabelle Bennett (Chair, WIPO Advisory Group of Judges) talked about how judges informally connect and support one another via things events like judges’ retreats, forming WhatsApp chat groups and similar informal support. Gordon Humphreys (EUIPO judge) said that the EUIPO is trying to be as consistent/unanimous in making its decisions as possible. International exchanges between judges are looked at on boards of appeal, who are trying to develop contact with trial and appeal boards in other countries (for example on how to deal with internet evidence).
3. REVIVAL OF EXHAUSTION IS DUE
After a product covered by an IP right has been sold by the IP right owner (or with his consent), the IP right pertaining to that sold product is ‘exhausted’ and the IP right holder should no longer be able to control the sold product downstream based on his IP right. Sir Robin Jacob (former Lord Justice of the Court of Appeal of England and Wales) pointed to the Doctrine of Exhaustion of Rights (known as the Principle of First Sales in the USA) as ripe for a revival.
a) Worldwide Exhaustion Rules By Type of Goods – such as Pharmaceuticals
Sir Jacob asked whether it is not more sensible to have exhaustion rules for the type of goods involved, rather than for the type of IP rights involved. Such rules should be holistic, should be internationally agreed (e.g. pharma companies selling drugs at cost in the Third World and having such drugs stay there and not make their way to the First World). He suggested worldwide exhaustion with a system of exceptions for the kind of product, not the kind of IP right (e.g. pharmaceuticals but not electronics).
Because different countries adopt different exhaustion rules, opportunities for gamesmanship by IP practitioners exist which an international treaty on the issue could solve. Individual countries having individual exhaustion rights create confusion and chaos in the stream of trade. This can mean life or death to entire business models who depend on it, such as a publisher’s entire business model. The Kirtsaeng v. John Wiley & Sons (US Supreme Court, 2013) case upheld the first-sale doctrine applied to copies of copyrighted works lawfully made abroad (arbitrage of academic text books), and the Impression Products v. Lexmark (US Supreme Court, 2017) case found that when a patent owner sells a product the sale exhausted patent rights in the item being sold regardless of any restrictions the patentee attempts to impose on the location of the sale, both domestically and internationally. Whole business models can be wiped out by exhaustion.
In the EU exhaustion is necessary for political reasons because of the common market which requires a free flow of goods between member states.
International exhaustion, if it could be agreed upon multilaterally, should either involve a list of principles for courts to apply, or have a detailed list of excepted goods. Life-saving pharmaceuticals should top such a list of goods excepted from exhaustion rules. (Singapore, for instance, has a special exhaustion regime just for pharmaceuticals.)
b) Exempt Luxury Goods From Exhaustion? Uhmm…
And then, to muddy the water of the nobly proposed Pharmaceutical exception, Luxury Goods enter the fray too – exceptions to the exhaustion doctrine for luxury goods are appearing in the EU. These are based on Article 15(2) of the EU Trademark Regulations which provides that exhaustion of a trademark right shall not apply “where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market”. European Court of Justice (CJEU) case law accepts that the reputation of a trademark could be such a legitimate reason. Two recent cases have now appeared to exempt luxury goods from the exhaustion rule.
The first case is Nomination v. Brealey (UK) where the Defendant disassembled bits of composable luxury charm bracelets and repackaged them for sale under the Plaintiff’s trademark in blister packs or in small transparent plastic bags which did not convey an impression of quality. Section 15(2) applied whether or not the Plaintiff’s reputation was damaged. The image of luxury, in selling the items in small plastic bags, was damaging. No exhaustion applied.
The second case was Kanebo v. Real (appeal court of Dusseldorf), where a German supermarket (Real) was selling Kanebo skincare products online. The goods were genuine and put on the market by Real with no alteration at all. The Court denied exhaustion under article 15(2). What was the legitimate reason? The court found that the quality of luxury goods is an allure, and an ‘aura of luxury’ – not just the characteristics of the goods. Extensive distribution of Kanebo’s luxury cosmetics on Real’s online platform “will draw the trademark into the everyday and the ordinary”.
In the USA there is no separate exhaustion protection for luxury goods yet. There may only be scope if a case could fall under famous mark protection.
Pertinent questions from the audience included whether we are in danger of encouraging trademark bullies by giving this added protection to iconic brands?
And, if the owners of iconic luxury brands are not going to restrict their purchasers to people who represent their brand’s cache (e.g. the beautiful, the young, the affluent, etc portrayed in their marketing), it should be too late in the game to stop the resale of their goods downstream.
Exhaustion is left open in Article 6 of TRIPS, which provides that nothing in the TRIPS agreement “shall be used to address the issue of the exhaustion of intellectual property rights”. Mr Taubman commented that “we haven’t even had any conversation about it”. It is an international issue, and a trade issue. Multilateral solutions can be found if there is political will, and exhaustion of IP rights certainly has an influence on trade policy.
4. ONWARDS AND UPWARDS FOR ICONIC BRANDS
a) Fame Can Side-Step Confusion
The power of fame was addressed in the case of Messi v Massi (2018). In that case the famous footballer Lionel Messi found that his trademark application was refused in view of a prior registration for MASSI. The EU General Court found that there were visual and phonetic similarity between the marks MESSI and MASSI, but not conceptual similarity – because of Mr Messi’s fame. The conceptual difference caused by his fame was such as to neutralise confusion. The case has been referred to the CJEU and is awaiting a final decision.
b) Fictional Trademarks Get Real
Fictional trademark use can block real-world trademark use, as happened in the case of Viacom International, Inc v IJR Capital Investment LLC (US 5th Circuit, 2018). Cartoon character Sponge Bob works at the Krusty Krab in the Viacom television show. IJR opened seafood restaurants in Texas named Krusty Krab. Viacom held no trademark registration of its own for Krusty Krab, nor did it oppose the Krusty Krab trademark application of IJR, or even use (or license) Krusty Krab for restaurants itself. But in 2016 Viacom sued, alleging unfair competition which confuses consumers who make a connection between the Texan restaurants and Viacom. Survey evidence showed that 30% of customers to IJR’s establishment assumed a connection with Viacom’s Sponge Bob show. Viacom had also at an earlier time gone from fictional to real as in the case of the Bubba Gump Shrimp Company restaurants spun from the movie Forrest Gump. Fictional elements from a famous show can accordingly receive trademark protection in the real world.
c) New Forms of Trademarks Evolve
There was an abolition of the graphical representation requirement from the definition of a trademark in the EU. However, a sign, to be trademarkable, still needs to be clear, stable, precise, self-contained, easily accessible, intelligible, durable and objective. And colours must be systematically arranged in a predetermined and uniform way. (These are known as the Sieckmann criteria.)
To cater for the emergence of new technology, new trademarks such as motion, sound, smell, taste, hologram and multimedia marks are now being filed at the EUIPO. And there are subcategories to these too – such as gesture marks (emerging as a subcategory of motion marks). The motion-gesture mark of a chef adding salt to a piece of meat, which was the signature of a famous Turkish chef, was refused as the chef was not able to show acquired distinctives throughout the EU. Distinctiveness in London was not enough.
Sound marks (such as a Stephen Hawking voice recording) must be ‘sufficiently memorable’ to be registerable. These new forms of marks must also not be too long or detailed.
Prof Peter Ruess discussed the Louboutin red sole stiletto shoe/colour mark ruling by the CJEU. He maintains that there is ambiguity and misunderstanding about what is a shape, colour or position mark. Position marks cannot be subjected to stringent functionality tests as function is not involved, only aesthetics. Article 7(1)(e)(iii) of the EU Trademark Regulations was revamped after the Louboutin judgment. It now provides that a sign shall not be registered which consists exclusively of “the shape, or another characteristic which gives substantial value to the goods”. Adidas 3 stripes, Levi Strauss’ red pocket tab, and the red Louboutin soles themselves, are examples of position marks and they “add substantial value”, hence showing the worrying ambiguity.
d) Descriptive Marks That Pass The Grade
Where descriptive marks in the USA are concerned, cases such as Pretzel Crisps for pretzel crackers, and Booking.com for hotel reservations came up.
Pretzel Crackers are still in it with a shot at registrability. The US Trademark Trial and Appeal Board (TTAB) found the name Pretzel Crisps generic. The Federal Circuit remanded the case on appeal because the wrong legal test had been applied. The TTAB had to look at the mark as a whole. The second TTAB opinion again found the mark to be generic. From here the case has now gone to the Western District Court of North Carolina (where the trademark owner is based).
The case of Booking.com B.V. v. USPTO followed a route from the TTAB (who found the mark to be generic for hotel reservation services), to the Eastern District Court of Virginia. It was successful there.
These two cases illustrate the procedural options available in the US when faced with a trademark refusal by the TTAB. The TTAB has 3 administrative judges. From there lies an appeal to the Federal Circuit Court, which procedure binds the appellant to the closed record on appeal, albeit it a more efficient and economical procedure. The alternative option is to proceed from the TTAB’s decision to the Federal District Court having jurisdiction, as a de novo complaint with which can be submitted new evidence. Additional claims can also accompany the case to District Court, for example infringement claims can be added.
The Federal Circuit’s Converse judgment (discussed by Anderson Duff) provided guidelines in proving secondary meaning (acquired distinctiveness). In October 2018 the Federal Circuit was provided with evidence going back to 1932 when the Converse shoe design was first released. But is that proof of secondary meaning? The Court found that the most relevant material to secondary meaning is that from the past 5 years, commencing ‘from the relevant date’. A trademark is not a nostalgia factor, it is a source identifier.
5. COPYRIGHT ON THE REBOUND
As it tuns out, the death of copyright has been greatly exaggerated.
a) Court On Track
The US Supreme Court had not been a hotbed of copyright litigation before, but in 2019 two rulings had come out on copyright. Both were unanimous decisions, and in both the Court got it right, said David Carson (Senior Copyright Counsel with the USPTO). The Fourth Estate-case and Rimini Street v. Oracle USA (US Supreme Court, 2019) relied on the most reasonable statutory interpretation, and the plain meaning of the copyright statute. In doing so the Court gave short shrift to policy arguments.
In Fourth Estate Public Benefit Corp. v. Wall-Street.com (US Supreme Court, 2019) the question was when registration of copyright occurs. In the USA suit cannot be filed until the (US) work relied on is registered or pre-registered. But, must you wait for registration, or can you proceed with suit once you have applied for registration? Answer: you must wait for registration. Inclusion of a preregistration option in the statute by itself is indicative that a suit requires registration.
In the US’s registration approach there is bifurcation between US works and non-US works (which are not subject to formalities). Is it conceivable that the US might get rid of copyright registration formalities? It is argued that having a registration system is useful and having a Copyright Office is too. Photographers are the big losers in the copyright registration system. Where the problem of registration of photographs are concerned, the system can currently take in 750 photographs a time and is gearing up to soon be taking in a lot more. But alternate private means of registration such as Blockchain could become the preferred alternative to government copyright registration services in future.
b) Moving Past SOPA and PIPA
The new US Registrar of Copyright, Karyn Temple, senses a change in the air. Amendments to copyright laws have been a painful slow process, while online piracy is rampant and current initiatives are not comprehensively addressing problems. In the online age there is a need for consensus between three factions – content, tech and the public – on legislation. But copyright reform is still haunted by the failed Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA) bills, which inspired mass resistance, slogans such as ‘Don’t break the internet’ and culminated in the Internet Blackout on January 18, 2012. After that happened, reform proposed in the area of sound recordings were called the ‘next SOPA and PIPA’ and blackballing of new IP legislation became the norm.
But things have changed, she said. Content and Tech have started working together (citing for example the YouTube licensing deal with Sony in 2017, and Netflix joining the Motion Picture Association this year). Both sides have discovered that they have something to gain by working together. As an example of the change in the air, she referred to 2018 legislation in the form of the Stop Enabling Sex Traffickers Act (SESTA) which passed into law in April 2018. The Act amends the Section 230 safe harbours of the Communications Decency Act (which made online services immune from civil liability for the actions of their users – the intent being to provide legal consequences for websites that profit from sex trafficking.) This despite criticism from pro-free speech and pro-Internet groups claiming it was a disguised internet censorship bill weakening safe harbours. The bill passed with support of the Internet Association.
c) New EU Copyright Directive
Marco Giorello (Head of Unit – Copyright, EU DG CONNECT) talked of the EU Directive, adopted 10 days before the Fordham Conference, on copyright reform, specifically the state of copyright in the digital economy. The Directive adopted a broad range of issues (with checks and balances), e.g. rightsholders in industry platforms are recognized now, new copyright for neighbouring rights such as film producers are created, the liability of internet platforms is recognized. From users’ perspectives there are exceptions (such as education, research), and there are new exceptions with novel mechanisms (give license priorities even where exceptions apply, right to opt out, simplified licenses for digitization of cultural heritage). The Directive is an attempt to find balance between exclusive rights and public policy. “Copyright still matters in the digital economy, as recognized by EU policy makers.”, says Mr Giorello.
d) Google v. Oracle Opinion Awaited
Google v. Oracle is an important marker on the copyright landscape. The US Supreme Court has never before decided to hear a copyright software case. The US Supreme Court had not addressed a fair use case in decades. It raises questions about the standard of review and what it is. Does the jury play any role in deciding fair use? Is the question of whether a work is transformative a question of law? Google copied in this case for direct competition. Should copyright grant exclusivity over functions? Or are patents and copyright mutually exclusive? Is operability a monopoly of function, or not?
The “merger doctrine” is when an idea and an expression are inseparable. If there is no other way to express an idea, then you have merger. The Baker-case together with section 102 codified “expression dichotomy”. Section 102 says that if a work is original, then there is copyright protection. But section 102(b) says that it doesn’t extend beyond the author’s expression of any idea, system, method of operation, discovery, etc. Oracle doesn’t seek to express code that depends on other code – just this specific code that it wrote. Oracle had unlimited options when it decided what code it was going to write. Section 102(b) doesn’t say that works which are functional cannot be copyrighted, else all software would be uncopyrightable (whereas software has been copyrightable since the 1980’s). Copyrightability of software asks whether specific parts of code are copyrightable, if not that, then fair use may apply. Inter-operability (different devices talking to each other) is important to innovation.
‘Fair Use’ is a mixed question of law and fact (as per the Harper & Row case – where a small part of the work was copied, but it was nevertheless the heart of the work). But the Court hasn’t said before what the jury’s role in that determination is. The question often comes up in summary judgment. In the 9th Circuit these cases do sometimes go to a jury to consider purposes of the use, nature of the use, and what was protected. In the Google case the purpose is functional – the case went to the nature of the copyrighted work and what was taken from it. For a jury decision to be reversed, you must show that “no reasonable juror could have reached a different conclusion”. There are 4 Fair Use factors in the Copyright Act, but they do not form a numerus clausus. Is “transformativeness” part of the purpose of the use? The software industry contributed $564 billion to the US economy. The outcome of the Google v. Oracle case will have great impact on software and computer technology.
6. INTERNET SERVICE PROVIDERS AND THE FUTURE OF THEIR SAFE HARBORS
The US Digital Millennium Copyright Act (DMCA) is 20 years old. And the Internet is not as profoundly dumb as was initially presumed.
The DMCA was a piece of compromised legislation a long time in the making. None of the companies that wanted the safe harbours it provides for are still in existence today. Google itself had hardly been born when the DMCA was adopted.
The principles of liability in the DMCA are a codification of the Californian Netcom-case which provided that you can’t make a bulletin board operator responsible if there is no ‘volition’. Internet Service Providers (ISPs) were provided ‘safe harbor’, which means that a content provider who does not have actual knowledge that the material on the site was an infringement, and is not aware of facts or circumstances where infringement is apparent, and acts quickly to remove the content, once made aware, will not be liable for copyright infringement damages. The most common way to see the safe harbor provisions in use is through takedown notices submitted to ISPs.
The infringement standards which were around at the time of the DMCA were direct infringement, and contributory infringement (with knowledge or constructive knowledge induces, causes, contributes to infringement), and vicarious infringement (where there is the right and ability to control, and direct financial interest).
Since then the “wilful blindness doctrine” may be applied to demonstrate knowledge, as imported into section 512 of the Act by the Viacom-case in 2012. There is also “red flag knowledge” which provides that, even in the absence of knowledge, the infringement must be taken down if circumstances show infringement and the ISP is “turning a blind eye to copyright infringement of an obvious nature”. And objective standard must be used. “Repeat infringement policies” is a further concept, such as in the Cox-case where the court imposed a high standard for the level of formality Cox had to apply to determine repeat infringements.
The safe harbors in section 512 had as its core the idea that service providers and rights holders would work together. If there is actual (genuine) knowledge or ‘red flag knowledge’ (where the infringement is apparent), the obligation on the part of the service provider to remove the content expeditiously kicks in. William Patry, counsel for Google, used the metaphor of a marriage in this context and argued that the system worked well. But Devlin Hartline (Antonin Scalia Law School at George Mason University) was critical of Google’s actual cooperation in removing sites like Pirate Bay from search results. He argued that the 2nd and 9th Circuits have all but read red flag knowledge out of the DMCA, and that the system was not serving all participants (the marriage had broken down).
In contrast to the safe harbors for ISPs in the US now comes the EU Copyright Reform, specifically Article 17 of the Directive on Copyright in the Digital Single Market as approved by the Council of the European Union on 15 April 2019. To control and reset the landscape populated by US giants like Facebook and YouTube, we need the trilogy of Copyright + Antitrust + Privacy/Data laws.
An example of the giants’ dominance in this landscape is how Google allegedly threatened to either de-index or index ‘lighter’ those press concerns that were holding out on providing Google with free press licenses. This led the EU to create neighbouring rights for press publishers. YouTube, another giant, reportedly gives but about € 80-100 for content generating 1 million views. The currently pending YouTube case has been referred to the ECJ from Germany last year.
Whilst the DMCA safe harbor provisions and the new EU Copyright Directive might be divergent now, there is the phenomenon referred to as the “Trans-Atlantic Accelerator”, a term for how laws go backward and forward between Europe and the USA to reach balance.
Etienne Sanz de Acedo suggested that the IP system has become “too traditional and obsolete”. Perhaps it has come time for the IP world to start thinking of data as another form of IP right, or as a neighbouring right.
7. BRAND EQUITY IS STORYTELLING
Chomwam Weeraworawit equates branding to storytelling. Her work focuses on how IP can be used to improve textile industries that are not price competitive anymore. Copyright + Trademarks + Marketing & Communications = Brand Equity, is her message. Her case study involved the 2015 geographical indication (GI) granted for Thailand’s Sakon Nakhon Indigo textiles – the story it tells, the IP protection granted, and the value to local industry that such brand equity created.
And as it is with brand equity, so it is with brand lawyers. We all love to tell our colourful stories, and add a bit of spice, as with a provocative cannabis trademark presentation (by Magdalena Berger), sly reference to adult diaper fetishes as part of a diaper case story (by Anderson Duff), and in-jokes about ‘Alibaba and the Forty Thieves’ in respect of cryptocurrency appropriation of Alibaba’s trademark. Trademark lawyers have the best time storytelling (remember this when you might need a break from more sober patent sessions at IP conferences!).
8. IP AND ANTITRUST BURY THE HATCHET
Nicholas Banasevic, Head of Unit: EU DG Competition, pointed out that IP and competition laws have the same goals, namely, to promote invention and benefit to consumers. He discussed Standards Essential Patents (SEPs) (which is where an industry gets together to come up with standards and there is a patent that enables/embodies that standard). Standard-setting means competitors coming together to set a technical norm and to exclude other technologies. But DG Competition accepts the benefits of standardization. There is a risk of dominant position inherent in competition context.
If your patent is included in standardisation, you will have to give a compulsory license on reasonable and non-discriminatory terms. This allows for fair compensation of the IP rightsholder but prevents the holder from getting more than before the standard was put in place. Where an injunction is brought by SEP, it could be abuse of dominant position. The Huawei judgment in 2015 regards the steps for licensors and licensees to take. The internet of things is bringing new products into the market which we couldn’t have imagined 5 years ago, and he identified that there is a need for policy guidance to help inexperienced SME’s who are entering that space.
Maria Martin-Prat (EU DG Trade Director) identified forced technology transference as a major IP trend. She categorised it generally as a sign of weak IP systems.
Andrew Finch (Antitrust Division of the US Department of Justice) sees a rebalancing going on. Standard Essential Patents is part of what brings that about. The right to exclude is essential to antitrust policy. FRAND (“fair, reasonable and non-discriminatory terms” for licenses) as a basis for negotiations breaking down could give rise to breach of agreement claims but it doesn’t give rise automatically to antitrust claims. He regards awards of treble damages (such as in case of wilful patent infringement in the US) as damaging to the incentive to innovate. More antitrust focus should go to standard setting organizations themselves: Is there fair and balanced representation? How do they operate – e.g. are they excluding competing technologies? They must adopt best technologies, and best standards.
It was questioned whether courts are the best way to deal with FRAND licensing issues. There is a voluntary licensing commitment that standards organizations often request from owners of IP that is or may become essential to practice a technical standard. Antitrust complaints relate to either those ‘holding up’ or ‘holding out’ in license negotiations. Renata Hesse talked of “trying to bring people back to the middle”, amplified by Dina Kallay saying that “antitrust is about safeguarding the integrity of the competitive process, not about taking sides”.
9. THE CHANGING ROLE OF IP LAWYERS AND INSTITUTIONS
From a trademark perspective, Etienne Sanz de Acedo pointed out, the demand for IP is rising daily around the globe, with 12,3 million trademark filings worldwide. Interesting statistics included that 96% of Americans shop online (of which 20% of the shopping is done in the bathroom!). The political and social engagement of companies matter to consumers. A lot of invention in the world presently is business model inventions, rather than true innovation. A privatization of functions that were traditionally done by governments is occurring, such as how Blockchain is getting more important, and how takedown services are operating voluntarily on online platforms.
As IP harmonization increases in the world, IP lawyers must look to add value in enforcement. Counterfeiting and piracy are on the rise. Instagram alone has seen an increase of 160% in counterfeit offerings this year.
Regulatory brand restrictions are scary because authorities are removing rights from brand owners (e.g. tobacco, sugary drinks, baby formula). There is no more Kellogg’s Tony the Tiger in Chile, or a smile on the Pringle Crips cannister. There is no more a red star on Heineken labels allowed in Hungary (lest it hark back to the Soviet era). Such brand constraints display a lack of understanding of the relevance of IP.
The global problem, according to him, is that IP is not adapted to SMEs and to entrepreneurs. Filings of new IP applications are not really helping. The problem lies at enforcement and at prosecution. “IP professionals should become business partners, business facilitators, become risk assessors.”, he said. Instead, practitioners want to protect their jobs, and countries want to protect their Trademark Offices. Over time registrations might be done by brand owners with Alibaba, with Google, etc, – ignoring trademark registration offices who may be perceived to give little practical return.
10. WEBSITE AND LIVESTREAM BLOCKING MECHANISMS GET FLEXIBLE
Livestreaming piracy of sports events undercuts financing models for broadcasters and other invested stakeholders. Do we have adequate IP tools to support the creative industries around livestreaming, but also to combat the serious piracy taking place?
The UK case of Cartier v. British Sky Broadcasting was the first case for website blocking injunctions and intermediary liability. Courts in the UK have jurisdiction to grant website blocking injunctions based on ordinary principles of equity regardless of EU laws, as per Judge Richard Arnold of the High Court of England and Wales. There are four conditions for the granting of injunctions, but proportionality is key among these. This goes to the nature of technical measures which Internet Service Providers (ISPs) must adopt.
Although injunctions are easily circumvented, they remain effective. There is no requirement that website owners must be sued before proceeding against ISPs. In the Cartier case the issue was who was to pay the cost of implementation – the court held it to be the IP rightsholder as it reasoned that ISPs are innocent parties (albeit that innocent parties can recover from the wrongdoer). Streaming service blocking injunctions, blocking of IP addresses of infringing servers – blocked for duration of sports match – are highly focused. “Dynamic injunctions” are important. A static injunction will be circumvented in minutes. In having these injunctions granted the rights of rightsholders, users, and exploiters of copyright must be balanced.
Marie Sellier defined livestreaming as the broadcasting of video in real time, live, with no change of content. Twitch-watching other people play online (e.g. playing Fortnite) is rapidly expanding. Multiple illegal streaming options are growing, e.g. OTT (over-the-top content delivered via internet rather than broadcast) subscription sites, KODI Boxes (devices allowing you access to pirate apps) allow streaming of every type of content, not just preloaded content.
There is a move from a site-blocking approach to a live-blocking approach which tries to make the framework more flexible. The UK is the most advanced country where live-blocking orders are concerned (FAPL vs BT). Blocking is based on a list of target servers that is updated before each match week during the Premier League season.
Mike Mellis (counsel for Major League Baseball) referenced the Coalition Against Online Video Piracy, which was established in 2007, and operates as a think tank for best practices consisting of more than 50 sports bodies. Illegal livestreaming is an international problem, facing IP counsel with the principle of the lowest common denominator – in which country is it most efficient to pursue the infringer? The industry is trying to educate government concerning illegal livestreaming. Livestreaming piracy is only a misdemeanour in the USA and not a felony.
In China the problem is even more difficult owing to that country’s questioning of whether live sportscasts are copyrightable matter or not. China has a higher-level requirement for “originality” to establish copyrightability.
Under the Berne Convention there is no copyright in a live sports match. This poses the question as to whether sports broadcasters should be granted a new neighbouring right? In the USA the 1976 Copyright Act (which the sports leagues lobbied for) makes it clear that simultaneously fixed (live) sportscasts do have the requisite amount of creativity to be copyright protected. As a photograph is.
Suzaan Laing
30 April 2019
