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However, although isolated naturally occurring DNA may not be patented, the US Supreme Court ruled that complementary DNA (synthetically created to exclude introns (non-coding sections of DNA)) is patentable because it is not “naturally occurring” – whereas in the EU it is recognised ,that biological material isolated from its natural environment may be the subject of an invention even if it previously occurred in nature”.
Association for Molecular Pathology et al v Myriad Genetics, Inc. et al No 12-398 US Supreme Court
The respondent, Myriad Genetics Inc. (“Myriad”), obtained several patents following discovery of the precise location and sequence of the BRCA1 and BRCA2 genes on human deoxyribonucleic acid (“DNA”). Mutation of the two genes can increase the risk of a patient developing breast and ovarian cancer. Myriad used this discovery to determine the nucleotide base sequence of these genes, enabling Myriad to develop medical tests for detecting mutations (a change in the base sequence) in the genes, thus assessing the patient’s cancer risk.
The petitioner, Association for Molecular Pathology (“AMP”), sought a declaration from the court that Myriad’s patents were invalid.
If valid, Myriad’s patents would give Myriad the exclusive right to isolate an individuals BRCA1 and BRCA2 genes and the exclusive right to create BRCA complementary DNA (“cDNA”), a synthetically created copy of the genomic DNA which excludes introns (sections of DNA which do not code for amino acids and therefore which are not used for protein synthesis in the body). Isolation of the genes enables genetic testing for mutations (and thus assessment of cancer risk) to take place. Since Myriad is in the business of developing and marketing diagnostic tests, having the exclusive right to isolate the genes is very important for Myriad’s business.
The District Court ruled that Myriad’s patent claims were invalid because they covered products of nature. The Circuit Court subsequently ruled in Myriad’s favour. AMP appealed to the US Supreme Court.
The US Supreme Court ruled that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated. However, complementary DNA is patent eligible because it is not naturally occurring.
The US Supreme Court judges made the following key points in their Opinion:
It is important to note that in its Opinion the US Supreme Court specifically states that it was “[merely holding] that genes and the information they encode are not patent eligible [under the US Patent Act] simply because they have been isolated from the surrounding material”. The Opinion also specifically sets down what is not implicated by the decision: (method claims; patents concerning new applications of knowledge about the BRCA1 and BRCA2 genes; and the patentability of DNA in which the order of the naturally occurring nucleotides has been altered.
Whilst the Court held merely isolating the genomic DNA from its surrounding genetic material does not make it eligible for patent protection in the US, since it is a discovery of a composition of matter that is already there (however much effort goes into finding it), this does not mean for example that genes in altered form are patentable; there will still be many areas of gene-related technology where patents will be obtainable.
Nevertheless, for biotech companies, concerns will be raised since the principle behind the Opinion is likely to be applied to other items found in nature, such as proteins and other molecules as well as other animal, plant and microbial genes.
So far as the situation is Europe is concerned, patent protection for biotechnological inventions is subject to the European Directive on the Patenting of Biotechnological Inventions. The Directive recognises that biological material isolated from its natural environment “… may be the subject of an invention even if it previously occurred in nature” [Article 3(2)]. The Guidelines in the European Patent Office make clear that “to find a previously unrecognised substance occurring in nature is also a mere discovery and therefore unpatentable. However, if a substance found in nature can be shown to produce a technical effect, it may be patentable…[and…a gene which is discovered to exist in nature may be patentable if a technical effect is revealed, eg its use in making a certain polypeptide or in gene therapy”. However, in practical terms, there may now be little difference between the position in the US, where genes and the information they encode are not patent eligible simply because they have been isolated from the surrounding material and that in Europe where, provided a technical effect is produced, such matter may be (ie is not specifically excluded from being) patentable.
Following a lengthy investigation, the European Commission has fined Lundbeck and a number of generic companies more than €140 million for entering into “pay for delay” agreements with competitors. Such “pay for delay” deals, an infringement of competition law, are not aimed at protection of intellectual property rights. Instead, the Commission says they have the effect of delaying the entry of competitors onto the market, keeping expenses high for European citizens and compensating competitors for lack of business by giving competitors the equivalent of what they would have earned if they had entered the market.
In 2002, Lundbeck entered into agreements with several producers of generic medicines (Alpharma, Merck KGaA/Generics UK, Arrow and Ranbaxy) to delay the market entry of cheaper generic versions of Lundbeck's branded Citalopram product, an antidepressant. The agreements contravened rules that prohibit anticompetitive agreements (under Article 101 of the Treaty on the Functioning of the European Union (“TFEU”)).
After Lundbeck's basic patent for the Citalopram product expired, it was faced with relying on a number of related process patents which provided more limited protection. Producers of cheaper, generic versions of Citalopram therefore had the opportunity to enter the market. Generic competition generally drives prices down significantly, reducing the profits of the producer of the branded product and bringing commensurate pricing benefits to patients.
However, in this case, the generics producers agreed with Lundbeck not to enter the market in return for substantial payments and other inducements from Lundbeck amounting to tens of millions of euros. Internal documents examined by the European Commission refer to a "club" being formed and "a pile of $$$" to be shared among the participants. Lundbeck paid significant lump sums, purchased generics producers' stock for the sole purpose of destroying it, and offered the generics producers guaranteed profits in a distribution agreement. The overall agreements gave Lundbeck the certainty that the generics producers would stay out of the market for the duration of the agreements without giving the generics producers any guarantee of market entry thereafter.
The Commission has ruled such agreements are an infringement of competition law and has fined Lundbeck €93,8 million and fines totalling € 52,2 million for the generics producers.
The Commission has been monitoring patent settlement agreements in the pharmaceutical sector for some time in order to identify those settlements which violate antitrust laws - namely those that limit generic entry whilst providing for a transfer of value from one party to a generics producer. The Commission’s latest report published in July 2012 concerning pay for delay agreements indicates that the proportion of such agreements has stabilised at the low level of 11% of settlement agreements generally.
It is not simply the level of fines that need to be taken into account. Any person or firm affected by anti-competitive behaviour such as pay for delay agreements may seek damages before the courts of Member States, and even though the Commission has fined the companies concerned, any damages awarded are unlikely to be reduced on account of the Commission fine.
Life is not likely to become easier for those found to be engaging in anti-competitive practices; in June 2013, the Commission adopted a proposal for a Directive that makes it easier for victims of anti-competitive practices to obtain damages (see IP/13/525 and MEMO/13/531).
The Court of Appeal confirms that Okotoks’ use of “FINE” infringed Fine & Country’s trade marks and upheld the High Court ruling on passing off, confirming the trial judge’s approach concerning independent witness evidence and acquired distinctiveness.
Okotoks Ltd and others v Fine & Country Ltd and others  EWCA Civ 672, 14 June 2013
The case between Fine & Country Ltd and others (“Fine & Country”) and Okotoks Ltd and others (“Okotoks”) concerned the use of marks by residential estate agents. Fine & Country’s registered national device mark and figurative Community Trade Mark were available to be used under licence by local firms of estate agents (Fine & Country did not operate as an estate agency itself).
Okotoks traded under the name “haart” and launched a premium sales business under the name “finehaart”, later changing the name to “FINE” (see below). Fine & Country alleged trade mark infringement and passing off.
At trial in the High Court in 2012, the judge ruled that Okotoks use of “FINE” with the strap line “selling fine homes throughout the country” was liable to confuse potential customers and that Fine & Country had established trade mark infringement and passing off. (See here for further information regarding the High Court ruling.) Okotoks appealed.
The Court of Appeal upheld the trial judge’s ruling and dismissed Okotoks’ appeal.
The Court of Appeal said the following about Okotoks’ several grounds of appeal:
Although Okotoks argued that the trial judge should have revoked Fine & Country’s marks because they were devoid of distinctive character, the Court of Appeal said that the judge made no error of principle in his assessment of acquired distinctiveness; although he did not follow the Windsurfing structure precisely, all the factors mentioned were those that the CJEU referred to in the judgment. On
inherent distinctiveness, the court said there had been deficiencies in the trial judge’s reasoning and if the case had only concerned inherent distinctiveness, the appeal might have been allowed. The trial judge’s ruling on infringement was upheld.
Although it might generally be expected that the use of a common word such as “FINE” would not give to a party using it the right to prevent its use by a third party, that was not the position here. However it is important to note that the case was very fact specific; there was compelling evidence from witnesses who said that they had been deceived by Okotoks’ particular use of the “FINE” sign.
The case acts as a good example of the care that needs to be taken even when using a common word (or other identifying feature) as a trade mark to ensure that a third party’s rights are not infringed. Simply because that word (or other identifying feature) is in common use, that is not necessarily sufficient to prevent a party acquiring rights in or relating to the use of that word or feature in a particular style.
The High Court recently determined the form of an injunction sought by Interflora following the keywords ruling against Marks and Spencer PLC and concluded that a general injunction (rather than one specifying the particular acts restrained) was appropriate and that the injunction should be EU-wide rather than limited to the UK.
Interflora Inc and another v Marks and Spencer Plc and another  EWHC 1484 (Ch), 12 June 2013
The claimants Interflora Inc and another (“Interflora”), recently successful in trade mark infringement proceedings against Marks and Spencer PLC and Flowers Direct Online Ltd (“M&S”) over M&S’s use of keywords (see Here for earlier report on the judgment), sought an injunction against M&S restraining M&S from further infringement of Interflora trade marks. In the present hearing, the court was asked to consider the form (specificity and geographical scope) of that injunction.
Interflora sought a general injunction restraining trade mark infringement; and a UK injunction in respect of its UK trade mark and an EU-wide injunction in respect of its Community Trade Mark (“CTM”). However, M&S argued that the injunction should specify the particular acts restrained and should only extend to the UK for both marks.
The court ruled that a general injunction would not be disproportionate or create a barrier to legitimate trade in the circumstances of the case. In the case of the CTM, the court ruled that the injunction should be EU-wide.
The judge, Arnold J, made the following points in his judgment:
The judge also considered the role of negative matching in the Google Adwords process. In the earlier judgment, the court ruled that keyword advertising by M&S infringed Interflora’s trade marks. In the present ruling, the judge said that the CJEU’s keyword advertising decisions all refer to the advertiser selecting a keyword which is identical or similar to the trade mark. Interflora said that M&S not only selected keywords identical or similar to Interflora’s trade marks; but also selected keywords which were not identical or even similar to Interflora’s marks. As a result of Google’s advanced broad matching algorithm, if an internet user searched for “interflora” an M&S advert was displayed because M&S had bid on the keyword “flower delivery”. In the present case, it appeared to the judge from M&S’s counsel’s skeleton argument that M&S disputed that it used an identical or similar mark when it was bidding on other flower related keywords by broad matching without negative matching “interflora”. However, the judge said M&S did use the sign but in an indirect way; it was immaterial that that this was achieved by technical means which did not involve selecting “interflora” as a keyword. M&S’s actions (a failure to negative match) still amounted to trade mark infringement. The judge said that his reasoning was not inconsistent with the CJEU’s ruling in Interflora.
From time to time questions are raised as to whether it is correct, in intellectual property cases, that the normal form of an injunction should be that it should prevent any future infringement of the intellectual property right, rather than one limited to the specific issues before the court at the time. This case gave the court the perfect opportunity to review that position, which it did, and left the position unchanged. The judge’s comments concerning negative matching will be welcomed by brand owners but will be of concern to keyword advertisers.
Although Dragons Den investors decided not to invest in the Trunki, the product later achieved success. Now in the High Court, Trunki has successfully claimed infringement of (i) its Community registered design; (ii) design rights in a number of design drawings; and (iii) copyright in a product safety notice on the packaging of the Trunki. The judgment provides useful guidance on the extent of prior disclosures and the applicability of the obscure disclosures exception under Article 7 of the Community Designs Regulation. As in the Trunki case, designs which are not sufficiently obscure as to be excluded by the obscure disclosures exception (and which may therefore be cited as prior art), may not form part of the design corpus when assessing the overall impression created by other designs under Article 10 of the Regulation.
Magmatic Ltd v PMS International Ltd  EWHC 1925 (Pat)
The claimant Magmatic Ltd (Magmatic) was the manufacturer and seller of a popular children’s ride-on suitcase sold under the Trunki trade mark. The Trunki was designed by Magmatic’s founder and director Mr Robert Law who studied product design at university. As a student, Mr Law entered a competition to produce a design for luggage. His competition design was entitled the Rodeo, a ride-on product made from injection moulding which had a large internal space for storage. Mr Law won the competition, was presented with an award at an awards ceremony and went on to develop his design further following university. The product was renamed Trunki and was first sold in 2004.
In 2006, Mr Law appeared on the television programme Dragons Den, seeking investment for his product but was turned down by the Dragons. However, he subsequently signed an agreement with the John Lewis department store chain and the product became successful. Different versions of the Trunki have been sold including versions with animal and insect prints (for example, cow, bee, lion).
The defendant PMS International Ltd (PMS) imported and sold a similar product called the Kiddee Case. There was no dispute that the design of the Kiddee case was inspired by the Trunki to some extent. Magmatic claimed that the Kiddee Case infringed several of Magmatic’s intellectual property rights: Community Registered Design (“CRD”) No. 43427-0001; design rights in a number of designs relating to the Trunki; copyright in the artwork for the packaging of the Trunki; and copyright in a safety notice which appeared on Trunki’s packaging.
Arnold J ruled that PMS infringed Magmatic’s CRD, infringed the design rights in certain of Magmatic’s designs, infringed copyright in the Trunki safety notice but did not infringe copyright in the Trunki artwork.
The decision provides useful guidance on the extent of prior disclosures and the applicability of the obscure disclosures exception under Article 7 of the Community Designs Regulation. The case demonstrates that designs which are not sufficiently obscure as to be excluded by the obscure disclosures exception may still not form part of the design corpus when assessing the overall impression created by other designs under Article 10 of the Regulation; and (the party seeking to rely upon the obscure disclosures exception has the burden of proving that the exception applies.
In 2012 the UK Intellectual Property Office (“IPO”) consulted on changes concerning copyright exceptions so that the UK's copyright framework moves with the times and remains relevant to the digital world. The consultation asked whether the UK ought to adopt the full list of copyright exceptions outlined in the EU Copyright Directive. Now, following that consultation and the responses received, the IPO has launched a public review of two proposed sets of amendments to copyright legislation.
The exceptions set out in the first set of amendments are:
Those in the second set of amendments are:
The European parliament has voted on new rules to enable customs organisations to better enforce intellectual property rights (“IPRs”). Although existing rules permit customs authorities to detain counterfeit goods, the new rules will strengthen existing powers and be of benefit to brand owners
From January 2014, broader powers include:
Note, however, that the Regulation specifically excludes goods of a non-commercial nature contained in travellers' personal luggage: the Regulation will not give power to customs to detain goods carried by travellers for their own personal use.
On 21 May 2013, Interflora obtained judgment in the High Court in London against Marks & Spencer (“M&S”) for use of Interflora’s registered trade marks as a Google AdWord.
In essence the judgment says that M&S infringed Interflora’s trade marks because, having purchased from Google certain keywords containing “interflora”, in its advertisements which came up on a Google search using those keywords, M&S failed to make clear to internet users that the M&S flower delivery service had no connection with Interflora. A significant proportion of internet users were led to believe that M&S’s flower delivery service was part of the Interflora network.
A further hearing on the level of damages payable by M&S will take place. This may not be the end of this long running dispute between the parties; M&S may well decide to appeal the decision. The effect of the ruling is that, if a third party’s trade mark is used as an AdWord, the advertisement must make clear that it does not originate from (nor is it economically connected with) the trade mark owner, and the onus is on the advertiser to do this.
How this will work in practice remains to be seen. It should be noted that the judgement does not prevent the use of third parties’ trade marks as Google AdWords in the UK (and, since M&S did not attempt to defend the claim by contending that its advertisements were comparative advertising, does not deal with the issue of trade mark use in comparative advertising, whether on the internet or otherwise). The issue of the use of trade marks as keywords still varies considerably between jurisdictions, even within the European Union.
The claimants, Interflora Inc and Interflora British Unit (together “Interflora”), operate the well known online flower delivery service which enables orders for flowers to be placed over the Internet. Interflora Inc. is the registered proprietor of two registered trade marks:
The defendant, “M&S”, operates an online flower delivery service through the M&S website.
Google operates the well-known internet search engine google.co.uk, one of the most popular websites in the UK. Google’s main source of revenue is from advertising and the principal way in which Google provides advertising is via its AdWords service. This works as follows:
It is also worth noting the following factors, mentioned in the judgment, which can also affect both the positioning of advertisements with Google AdWords and how users are influenced by advertisements:
M&S purchased from Google several AdWords containing the name “interflora”. This meant that advertisements for M&S’s flower delivery service would be displayed on the SERP whenever an internet user entered the search term “interflora” (or similar terms) on the Google search engine.
Prior to May 2008, Google would block a keyword from being purchased as an AdWord by a third party if the trade mark owner notified Google that the keyword had been registered as a trade mark. On 5 May 2008, Google changed its policy for the UK and Ireland and ceased to block keywords registered as trade marks.
On 6 May 2008, M&S started bidding on “interflora” and other keywords relating to “interflora” - this had the effect of triggering the display of advertisements for M&S’s Flowers Online service on the SERP. Notably, the advertising text in the M&S advertisement did not incorporate or reference the Trade Marks - there was no reference to Interflora.
In January 2012, Interflora implemented a “golden box” brand defence strategy - ensuring that all Interflora related sites appeared in the shaded box and ensuring that M&S’s advertisements were excluded. This meant that Interflora incurred additional bidding costs payable to Google, but as a result M&S’s share of internet traffic declined.
In 2008, Interflora brought proceedings against M&S alleging infringement of the Trade Marks under Article 5(1)(a) and Article 5(2) of the Trade Mark Directive1. Article 5(1)(a) of the Trade Marks Directive (89/104/EC) confers on a trade mark proprietor the right to prevent third parties using (without consent) in the course of trade “any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered”.
Article 5(2) provides that a proprietor may prevent all third parties not having his consent from using in the course of trade “any sign which is identical with or similar to the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark”.
There was no dispute between the parties concerning the validity of the Trade Marks nor did M&S dispute that Interflora had acquired a substantial reputation in the UK and elsewhere in the European Union in relation to flower delivery and the operation of a flower delivery network.
Case law of the Court of Justice of the European Union (“CJEU”) has established that a trade mark proprietor can only succeed in a claim under Article 5(1)(a) of the Directive if six conditions are satisfied:
By the time of the trial, there was no dispute as to the first five conditions and it was common ground between Interflora and M&S that the signs used by M&S were identical to the Trade Marks. The sixth condition is satisfied if the use of the sign affects or is liable to affect one of the functions of the trade mark, the functions being:
following Case C-487/07 L’Oréal SA v Bellure NV  ECR I-5185 at -.
The Judge, Mr Justice Arnold, concluded that, as at the relevant date of 6 May 2008:
The judge made the following points of note in his judgment:
This ruling does not mean the end of services offering cost per click advertising. Although Google no longer operates a trade mark complaints procedure in the UK by which trade mark owners can apply to block their trade marks being chosen as keywords, other search engines, such as Microsoft’s Bing and Yahoo!, do offer such services. Thus the decision will not be of current practical relevance to all search engines.
There were several points of law that were not raised by M&S, in particular the issue of comparative advertising that could have an impact on any future case.
The overall “take” is that there is nothing in the judgment that appears detrimental to the interests of trade mark owners wishing to protect their rights, and the judgment certainly does not give a blanket right to third parties to use another’s trade mark as a keyword. Nor does it prohibit the use of trade marks as keywords.
Rather the judgment indicates that if a third party’s trade mark is used as a key word, any content appearing on the screen of the person conducting the search (other than the natural results of that search) must make it clear that such content does not originate from (or is not economically connected with) the trade mark owner.
This will have marketeers scratching their heads before any purchase, trying to ensure that there could be no implication of connection. For some brands, with obvious public rivalry like Coca Cola and Pepsi, the argument may be harder to run simply because they are so publicly not connected.
For more borderline cases, the choice of advertising text becomes key, especially balancing the desire for snappy creative with the need to make clear there is no connection. How this will work in practice remains to be seen. Interesting times may still be ahead!
It is clear that the use of keywords in advertising on the internet should be properly controlled, and any policy in this respect carefully reviewed and adhered to. This is particularly the case where it may be expected that the advertisements shown as a result of the use of keywords will be seen in more than one jurisdiction.
For more information please contact Ian Wood, Partner
T: +44 (0)20 7203 5124