Update: intellectual property

Patents and software: Macrossan

It is rare for the Court of Appeal to look at the issue of patent protection for computer software. The Patents Act 1977 provides that computer software is not protected by patents 'as such'. However many patents have been obtained in the UK and European Patent Offices where the software is part of an overall invention. On 27 October, in Macrossan v Comptroller General of Patents Designs and Trade Marks and Aerotel v Telco, the Court of Appeal restricted the law on software and business method patentability. They rejected an attempt by an Australian, Neal Macrossan, to patent his invention for an automated system that compiles the necessary documents for incorporating a company in the UK. The court held that his software was excluded from patentability on the grounds that it was a 'business method' and 'computer program'. They handled another case at the same time and found in favour of an Israeli telecoms company Aerotel in its patent dispute with Telco. Aerotel's telephone equipment constituted a hardware invention and was therefore excluded from software restrictions.

Dr John Collins, partner at Marks & Clerk, and a specialist in software patents, says:

'This judgment merely increases the chasm between the European and UK consideration of software and business method patentability, adding to the perceived anti-software stance of the UK Patent Office. Rejecting one invention as a computer program and business method, and allowing another on the grounds that it is not purely software, detracts from the essential point. If it is new, not obvious, and provides a technical contribution, software should, theoretically, be patentable. It is disappointing that the court did not truly clarify what software can be patented by avoiding the difficult interpretation of what is a computer program 'as such'.'

It is thought that the judgment may in due course have the opposite effect. The judges involved took the unprecedented step of seeking clarification from the Enlarged Board of Appeal of the European Patent Office on a number of key points. These points relate to how exclusions should be applied to software and business method patents and would have a Europe-wide impact on the treatment of these patents.

The judgment is important because previous case law had left many users unclear as to the correct test for patentability. The approach now laid down by the Court of Appeal should remove much of the confusion that had developed. It will be binding on both the High Court and The Patent Office.

The Patent Office is considering the implications of the judgment and intends to issue a practice note. Judgment is at https://www.patent.gov.uk/2006ewcaciv1371.pdf.

Patents and jurisdiction

Primus v Roche (C-539/03) and GAT v LuK (C-4/03) (13.07.06) recently examined jurisdiction under the Brussels Regulation 44/2001 and patents. The European Court of Justice prohibited the hearing of patent infringement actions which are being held elsewhere. Actions had been brought in several EU states (see Gazette, 21.10.06).

Patent office opinions and mediation

The Patent Office now publishes opinions it gives on applications for its opinion service. Twenty-three have been published to date '“ see https://www.patent.gov.uk/patent/p-object-opinion-advert. There is also the facility for those who want to comment on third parties' applications for opinions to do so.

Separately, the Patent Office mediation service is now up and running. In September the Patent Office won an award for this service in the annual CEDR Excellence in Alternative Dispute Resolution Awards for the introduction of a new mediation service to help companies and individuals involved in intellectual property (IP) disputes.

"That the Patent Office had made an extraordinary achievement in introducing ADR (alternative dispute resolution) into its work in resolving disputes. It showed leadership and innovation, with the ability to impact on how an entire sector will manage its conflicts."

The Patent Office mediation service launched in April 2006 and covers all types of intellectual property rights. This includes unregistered rights: copyright and design.

'Free-riding' infringes trade marks

At the end of October the court looked at trade marks for smells. L'Oreal had sued those selling perfumes that smelled like its brands and lost most of its claims. The court found, even in the absence of any likelihood of confusion, certain of the marks had been infringed by virtue of s 10(3) of the Trade Marks Act. The defendants had been 'free-riding''š on the reputation of these marks, thereby taking 'unfair advantage' of their character or reputation. The marks were 'Tresor', 'Miracle''š 'Anais Anais''š and 'Noa''š perfumes, and their packaging. Rouse & Co said: 'This decision, believed to be the first in which a brand owner has succeeded under s 10(3), provides useful guidance on what constitutes taking advantage of, or causing detriment to, a registered mark. Hitherto, many commentators thought that the threshold test for proof of damage was much higher. Supermarket lookalikes will now be more vulnerable '“ at least in law, if not in practice.'

Representative actions consultation

The Patent Office has just announced a consultation on representative actions for the enforcement of intellectual property rights. This arose because, when the Patent Office implemented the IP Enforcement Directive, it found an interest in this area. An example of a representative action would be an action undertaken by a trade association on behalf of some or all of its members to defend their intellectual property rights. Patent Office CEO Ron Marchant says:

'The consultation should establish whether the introduction of representative actions will provide real benefits in terms of reduced enforcement costs, and check whether such actions would encourage inappropriate litigation.'

The Patent Office is running a series of workshops for anyone who is interested in finding out more before they make a formal response to the consultation. The consultation is open to anyone who wishes to respond and will run for 12 weeks, ending on 18 December 2006.Representative actions were considered during the implementation of IP Enforcement Directive (2004/48/EC) with respect to Art 4 (Persons entitled to apply for the application of the measures, procedures and remedies). However, the Directive did not make provision for them.

Database right: EU consultation

The European Commission has published the comments from correspondents on its consultation on the EU database directive. These can be accessed at https://ec.europa.eu/internal_market/copyright/prot-databases/prot-databases_en.htm and provide a very useful set of papers and comments on EU database rights and how it has operated in practice after the British Horseracing Board ECJ decision. Many valuable databases have lost protection as a result. Comments by bodies such as the Licensing Executives Society of Britain and Ireland and from British Horseracing Board are available online. What changes will emerge to the Directive are not yet clear.

EU consultation on litigation costs insurance

In October 2006, the EU launched a study on 'The possible introduction of an insurance against costs for litigation in patent cases' by CJA Consultants Ltd. Following the first study on patent litigation insurance, commissioned in January 2002 by the EU Directorate General for Internal Market and Services, a follow-up study was commissioned in 2004 with the aim of evaluating the feasibility of a small number of alternatives schemes of patent litigation insurance. This follow-up study has just been published. The Commission is seeking views of all interested parties on this follow-up study and invite them to submit their contributions by 31 December 2006. Email: alfonso.calles-sanchez@ec.europa.eu.

Indications of origin

Most readers will know that Parma Ham comes from Italy and Jersey Royals must originate from Jersey. There are EU rules on these so called 'appellations of origin'. The European Commission has launched various new proposals for the protection of geographical indications (GIs). A new regulation on GIs for agricultural products and foodstuffs (regulation 510/2006) was adopted in March 2006, a proposal for a new spirits regulation providing for a GI registration system ( to replace reg 1576/89 ) was published in December 2005, and a GI registration system for wines is being discussed in relation to the reform plans for the wine sector.

Registration of designs

A new UK system for registering designs began on 1 October. The changes include:

• Simplified application process.
• Multiple applications made on one form, which must be by the same applicant,
• otherwise there are no restrictions on
• multiple filings for new designs.
• Access to official files that document
• proceedings in the design application process.
• Postponement of public disclosure (on request) for up to 12 months.

See the Regulatory Reform (Registered Designs) Order 2006 (SI no 1974), the Registered Designs Rules 2006 (SI no 2424) and the Registered Designs (Fees) (No 2) Rules 2006 (S no 2617). Since the introduction of the registered Community design in April 2003, the proportion of unrepresented applicants from small- and medium-sized enterprises has more than doubled to about 70 per cent. Therefore, there has been a need to change the system to ensure that the whole process for the application of new designs and their maintenance on the register is as simple and straightforward as possible, the Patent Office has said.

Software copyright infringement: BSA increases rewards

It is important to ensure all computer software used in your business is properly licensed otherwise a breach of contract and of the Copyright, Designs and Patents Act 1988 could occur. The Business Software Alliance (BSA) has recently doubled its maximum reward for people who report the use of unlicensed software within UK businesses before the end of June 2006. Those reporting are given anonymity and can receive up to £20,000.

'By doubling the incentives for informants we are also effectively doubling the risk for businesses of getting caught out,' says Siobhan Carroll, regional manager Northern Europe, BSA. 'Hopefully, this will make software licensing a higher priority.'

It is also sensible to have a solicitor look at any licence agreements you are asked to execute. Many software licensors expect the licensee/buyer to sign on the dotted line.

Businesses may want to consider whether:

• The licence allows other companies in your corporate group to use the software.
• They are allowed to bring in an outsourcing or facilities management company to assist with the software and deal with faults.
• The licence permits assignment '“ eg, if you sell the assets of the business.
• Use can be transferred to another computer system or the software moved when the business moves offices.
• Use is allowed not just by employees but contractors and self employed staff as well.

Free movement of goods

In Sportswear Company SpA, Four Marketing Ltd v Sarbeet Ghattura (t/a GS3) Sportswear Company SpA, Four Marketing Ltd v Stonestyle Ltd [2005] EWHC 2087, the claimants sued because the defendants had sold their garments, but with the labels torn out as the labels contained a means of enabling the claimants to work out where the goods had come from and to pursue resellers who were parallel importing. The defendants therefore ran a defence of breach of EU competition law. However, the court held that there was insufficiently close a connection between the infringement of trade mark action and the competition law breaches alleged.

Enforcing intellectual property rights

The UK has implemented an EU Directive on enforcement of intellectual property rights by new regulations '“ see Intellectual Property (Enforcement, etc) Regulations 2006 and the Community Trade Mark Regulations 2006. Anyone using intellectual property without permission risks not only a damages action against, but also sometimes a prosecution for breach of the criminal law.

Moral rights for performers

Regulations introducing moral rights for performers into UK law are now published and came into force on 1 February 2006, see the Performances (Moral Rights, etc) Regulations 2006 (SI no 18). Moral rights in the performances are available from that date. For further information, contact Karl Whitfield, The Patent Office Concept House, Cardiff Road, Newport, South Wales, NP10 8QQ, Tel: 01633 814734