The penultimate paragraph of the judgment provides a rationale for imposition of the punitive damages and the permanent injunction. It states: "More and more foreign companies are entering our markets, with latest products. They would be discouraged to enter our country to introduce newer products and make substantial investments here, if the Courts do not grant adequate protection to their intellectual property rights such as patents, trademarks and copyrights.."
Thursday, March 31, 2011
The penultimate paragraph of the judgment provides a rationale for imposition of the punitive damages and the permanent injunction. It states: "More and more foreign companies are entering our markets, with latest products. They would be discouraged to enter our country to introduce newer products and make substantial investments here, if the Courts do not grant adequate protection to their intellectual property rights such as patents, trademarks and copyrights.."
|Picture Credit: Kevin Dean from www.betaart.com|
As we've highlighted several times on this blog, the pharmaceutical lobby in EU and US have (through their governments) tried to push India into accepting many stronger IP rights, including data exclusivity. As we've also highlighted several times, data exclusivity has been consistently been opposed by the Indian Pharmaceutical Alliance as well as several NGOs; however we haven't been as sure as to what position the government was going to take in the EU-India FTA that's being negotiated. Recently, in the Consultative Committee of Parliament on challenges in IPR, Mr Anand Sharma, the Union Commerce and Industry Minister, who chaired the meeting, clearly stated that data exclusivity would not be permitted, as it is a TRIPS-plus demand and that allowing it would considerably impact the entry of generic medicines into the market.
He also made a mention of the illegal seizures that took place due to EC Regulation 1383 and stated that the EU's statement on the matter is that they've intensified efforts to change the regulation. In response to the worrying development of the ACTA, he stated that all the concerned departments, including the Dept of Industrial Policy and Promotion (DIPP), Health, Pharmaceuticals, and MEA are acting in concert with one another.
This clear stance by the Commerce Minister will give relief to at least some of the concerns about the FTA's outcome. For the full press release, see here.
During a recent meeting of a Parliamentary Committee dealing with intellectual property, the Minister, who chaired the meeting announced that India will not accept data exclusivity norms as this would "have considerable impact in delaying the entry into the market of cheaper generic drugs”.
Meanwhile, on the other side of the fence, the EU appears to have mellowed down from an earlier more forceful stand of (we won't settle for anything other than data exclusivity!) to a considerably more diluted "Should the Indian government at some point put forward legislation for data protection in respect of Indian companies, all the EU is seeking is reciprocity in respect of European companies. That is to say a fair and level playing field for both Indian and European companies..".
So said John Clancy, spokesperson for EU Trade Commissioner Karel de Guchtan EU commissioner in this interview here.
Well, one wonders why Clancy had to even bother mentioning this; after all, current WTO norms prevent India from providing data exclusivity protection to only its domestic companies (and not to foreign companies). That is the very essence of the concept of "national treatment", a cardinal principle upon which the WTO regime is founded.
Unless the Indian government is amnesic, the EU can be certain that India will not risk a WTO complaint on this count. After all, memories of an embarrassing WTO defeat suffered at the hands of the US (when it tried to argue, rather speciously that it had effectively created a defacto system for patent mailbox applications, visible to and discernible only by its supernaturally gifted patent officials) continue to haunt.
But more importantly, it is very unlikely that Indian industry would risk sanction under Section 309 of the IPC and demand data exclusivity norms for themselves. Unless of course, the IPI bastion suffers a splinter owing to the recent lure of mergers, mouth watering valuations and buyouts and some of the domestic majors such as Dr Reddys began demanding data exclusivity. But Paul is gone, and I am no seer.
The upshot of the above discussion is this: data exclusivity for drugs is dead..at least for the moment.
But what about what about pesticides? Sadly, in the midst of all this focus on drugs and data exclusivity, we'd forgotten that pesticide exclusivity was slowly being sneaked in, despite a Parliamentary Committee Report opposing its entry.
The alleged government move to introduce such exclusivity rests on the flimsy findings of a report that would have barely earned a "pass" grade, were it a student written submission. If you're interested in learning how not to write a policy report, try your hand with the Satwant Reddy report, which not only gave "fence sitting" a new meaning altogether, but advanced propositions that it cited as the gospel truth sans any empirical validation, contradicted itself at several places and arrived at conclusions that were not adequately reasoned.
But more importantly, one needs to interrogate its assertion that it was merely toeing the line of "industry" in recommending data exclusivity for pesticides. The key question is: who is this "industry"? Were the Indian companies even consulted? Or did "industry" merely refer to multinational industry? The assertions in the Reddy report on this count read like statements from a policy brief that had been submitted by Croplife. But who is to blame for this sorry state of affairs? For one, the civil society activism around "food" and pesticides appear to be less vigorous than public health, at least in so far as IP issues are concerned. Paradoxical really, given that food is more of a basic necessity than health.
Secondly, one cannot help but notice the lackadaiscal attitude of the Indian agro-chemical industry on this count. If they were not consulted adquatley, they ought to have made a hue and cry about this. It is rather striking that despite the back door entry of exclusivity through a government notification that is blatantly unconstitutional, this industry has not budged and this notification continues to be the law of the land.
Lastly, although the pharma data exclusivity debate is not likely to see any resurgence in the immediate future, we need to ask: is there some space for "data exclusivity" style protection for "India" specific drugs?
Illustratively, what of Ayurvedic drugs, on which clinical trials have been conducted and data generated? Or for drugs that specifically address diseases of the poor (particularly of the Indian poor)? I personally think that some kind of data protection will help incentivise more investments into the development (and trials) of drugs for such diseases. However, as I have repeatedly argued, it need not be an exclusivity style protection. A compensatory liability model, where the innovator cannot exclude, but is only entitled to reasonable compensation from follow on entrants, who are able to enter the market on day one and promote more competitive prices, might be a more optimal way to go forward. A particularly attractive policy option for a country such as India with an extremely strong generic sector.
I had also argued that such a compensatory liability model be deployed for clinical trial data that was specifically generated for India, and without which the drug could not have been approved in India.
But this is all contingent upon a robust regulatory framework and a DCGI (Drug Controller General of India) willing to exercise high levels of scrutiny. Sadly, despite drug regulation and issues of drug safety having a more significant nexus to the issue of public health than patents, such issues are have largely remained under the table (literally and metaphorically). Hopefully, this will change in the years to come and we can bring more focus and public attention upon drug regulatory and safety issues and help resuscitate them from under the table to engender a healthier policy discussion. As with the patent office, a little bit of sunlight can disinfect a great deal here too.
Wednesday, March 30, 2011
Tuesday, March 29, 2011
(Warning: Long post!)
I provided a brief overview of the decision in the Google Books Search settlement case, wherein Justice Chin of the United States District Court rejected the proposed settlement entered into between Google, the Authors Guild and the publishing industry. In this post, I will look at the decision in greater detail, and briefly examine Google's future options.
What was the need for a Google Books settlement?
Google Books is a service several of us as students, academicians and practitioners are more than familiar with and has proved to be invaluable where hard copied of books are either damaged, out of print or just too expensive to be procured. The service from Google searches the full text of books that Google has scanned, converted to text using OCR and stored in its digital database and makes them available to users in snippets.
The Google Books Settlement (hereinafter 'GBS') is an attempt by Google to counter the claims of copyright infringement that were levelled against it from as early as 2005, with Google relying on a fair use defence that many argued was excessive and inapplicable to a situation wherein Google was copying full texts of books and saving them in its own digital databases. Leaving aside the issue of an implied license to copy, possibly favouring Google in such a case, the larger issue that courts seemed concerned with prior to the settlement being reached, was the sheer quantity of text that Google copied on to its servers, notwithstanding the fact that it was making only searchable summaries online to users in the case of copyrighted works. In view of the claims brought against it over the years, Google entered into a settlement agreement with the Authors Guild and the publishing industry on October 28, 2008.
What were the terms of the proposed Google Books settlement?
The fundamental terms of the settlement were as follows: (for a more detailed explanation of the terms, you can visit the official website created by Google over here)
- The rights granted to Google are non-exclusive in nature. This implies that the authors and publishers are free to enter into such agreements with other parties as well. So for example if Apple were to start its own digital library a few years from now, the GBS does not preclude its formation.
- Google is allowed to continue to digitise books and inserts, sell subscriptions, online access to individual books and advertising on certain pages as well as display previews, snippets and bibliographic information of the books digitised.
- Google will pay rights holders 63% of all revenues Google receives from the commercial uses of the digitised books.
- Google will pay $34.5 million to establish and maintain a Book Rights Registry, containing contact information and for collection and distribution of revenue to rightsholders.
- Importantly, rightsholders were given the right to determine whether and to what extent Google may use their copyrighted writings.
- The settlement also provided for the creation of an independent Unclaimed Works Fiduciary to represent interests with respect to, and assume responsibility for certain decisions pertaining to unclaimed works. This particular term is relevant in the context of 'orphan works', an issue that was raised in the court proceedings and a major ground of objection.
- Rightsholders of Books also had the option of removal or exclusion. This is important in the context of determining whether the opt-out system provided for was reasonable of not.
The principal objections can be classified under the following broad headings:
- Class action suit concerns
2. Copyright concerns
There were two main grounds of objection in copyright law. The first revolves around the fact that the settlement covers issues that should be properly considered, deliberated upon and decided by Congress and not through private agreement between the parties, as it raises important issues in the realm of copyright law. Since the settlement was subject to the court's scrutiny, any affirmation of the same by the judiciary would encroach on the constitutional and legislative authority of the Congress to regulate such matters. The other objection is linked to the question of orphan works (where the owners of the work cannot be contacted) and the settlement licensing such works to be a violation of the Copyright Act.
3. Antitrust concerns
The antitrust concern is one that is perceivable without any strict grounding in the law itself. The fact that Google would have a monopoly over digital books, and without question, orphan books, is a certainly a cause for concern. The antitrust objections appear to be more holistic with an emphasis on the potential dominance of Google in the overall online search market, and not restricted to Google Books search.
4. Privacy concerns
The privacy concerns were raised by several civil society organisations in relation to the vast amounts of information that Google would be able to amass by merely tracking user habits. Thus, Google would have access to information right from the books viewed by a particular user, to the precise page number as well as the amount of time spent on each page.
5. International law concerns
Although the GBS is restricted to U.S works and works registered in the U.S., the opt-out system envisaged under the settlement caused some to raise the objection on the ground that it would violate international law by requiring foreign rights-holders to determine the applicability of the GBS.
What was the basis for the ruling on the objections raised?
1. Class action matters:
While this aspect of the court's ruling is not necessarily relevant to a discussion on IP, I'd like to briefly set out the court's decision on this issue. Firstly, it held that the members of the class received adequate notice of the proposed settlement. It explained how several individual notices were sent aside from the fact that a website was created solely for this purpose. Judge Chin however agreed that it was possible that the interest of all members of the class were not adequately represented and may even have been at odds with each other. The entire issue has been explained in great detail here.
2. Copyright concerns:
One of the primary issues was whether judicial affirmation of the settlement was an encroachment on the legislature's prerogative to address copyright issues, such as those covered in the proposed settlement. The U.S. Supreme Court has declared that such judicial intervention is only appropriate when copyright issues are presented as a result of technological developments.
One of the primary copyright concerns was the creation of an opt-out system wherein authors covered by the settlement would have to notify Google of their desire to have their works excluded. Such a system was vehemently objected to on the ground that it deviated substantially from the intent and purpose of U.S copyright law which allowed a rightsholder to 'sit back, do nothing and enjoy his property rights untrammelled by others exploiting his works without permission.' I feel there is a degree of merit in this contention since such a system would certainly expropriate rights of individuals involuntarily, by means of a system unrecognised by statutory copyright law. This is evidently even more unreasonable to a class member who is unaware that the settlement covers works owned by him or her, and upon failure to expressly notify Google that he wishes the work to be excluded/removed, has the work digitised against his will. The judgement itself cites the concerns of several independent authors who advance a similar argument, stressing on the creation of a system which places the burden on the rightsholder to exclude himself from the scheme, which is incongruous with current copyright law.
3. Antitrust concerns:
The antitrust concerns stem primarily from the fact that Google would have a monopoly over unclaimed or orphan works, as well as entrench its dominant position in the online search market. It would have the ability to deny future competitors the right to search orphan books, as well as enter into agreements with third parties to display snippets of books it has scanned for a fee. Judge Chin noted the above and stressed that the mandatory requirement for authors of works to object to digitisation, would certainly grant Google a monopoly over works where the authors were untraceable, raising serious anti-trust concerns.
4. Privacy concerns:
While Judge Chin did note that 'the privacy concerns are real', he noted that such concerns by themselves are insufficient to reject the proposed settlement. This indicates to me that if Google were to make another attempt at a settlement, it should focus more on the copyright and antitrust concerns, while maintaining reasonable safeguards on the disclosure of reader information. Judge Chin suggests 'additional privacy protections', without getting into specifics, so it appears that Google need only focus on non-disclosure of reader information and concretisation of its undertakings in this regard.
5. International law concerns
Such concerns were mainly advanced by owners of foreign works, which were registered in the U.S to ensure coverage of American law, and fall within the ambit of the proposed settlement, by virtue of this fact. Of particular importance is the objection raised by Indian authors and publishers, who state that the settlement "continues to provide Google with sweeping rights to exploit works of Indian authors/publishers under copyright protection without their express permission/consent, a violation of international and Indian copyright laws,” which also finds mention in the decision of the District Court. They contend that the settlement would violate the Berne Convention and the TRIPS agreement. Interestingly, Judge Chin in his decision states that “in any event, I need not decide whether the ASA would violate international law. In light of all the circumstances, it is significant that foreign authors, publishers, and, indeed, nations would raise the issue.” The other issues raised by foreign rightholders were acknowledged by Judge Chin, including the difficulty in determining whether the settlement applied to them and the issue of orphan works being a global one.
Thus, based on the above reasoning, Judge Chin held the proposed settlement to be “(sic) unfair, inadequate and unreasonable” and dismissed the motion for final approval of the settlement.
What happens now?
In his concluding paragraph, Judge Chin hints that by transforming the system into an opt-in regime instead of an opt-out one, the difficulties expressed above may be avoided. Secondly, by declaring that the motion is denied 'without prejudice', Judge Chin has left the door open for a renegotiation of the settlement terms.
Thus the case could proceed to trial, the parties could appeal, or a renegotiated settlement could be submitted, while accounting for the concerns raised by Judge Chin. While the Authors Guild and publishers might prefer the latter option, Google has in the past, categorically stated that the creation of an opt-in system is not a viable option. While Google continues to stress that the issue of orphan works is being made out to be bigger than it actually is (since it claims the number of works where authors cannot be located are relatively few) it continues to be a niggling concern – one that Google must address in one form or another. Some have suggested that Google could push for a legislation that satisfactorily addresses the orphan works issue, providing sufficient room to manoeuvre itself through the settlement terms and realise its original objectives. Others have argued that Google has a very strong fair use case and hence settling for an opt-in system is not its best option. Either way, we can expect a whole lot of lobbying, aggressive campaigning and hurried negotiations.
Whatever be the case, the entire Google Books case has highlighted several issues in an increasingly important field and we will track the developments as and when they come in.
Sunday, March 27, 2011
This time, Spicy IP brings to its readers an incisive post by D. Christopher Ohly and Sailesh K. Patel on the matter of inequitable conduct during the filing and prosecution of a patent application. Chris Ohly, a well reputed and leading patent litigator in the US, and Sailesh Patel, another brilliant patent attorney and partner at Schiff Hardin, LLP., had even before this offered their joint expertise and scholarship to the Spicy IP readers here.
(Statutory Warning: Very long post)
Inequitable Conduct: Therasense En Banc
On November 15, 2010, Therasense, Inc. v. Becton Dickinson and Co., No. 2008-1511o (January 25, 2010), was argued en banc. The Federal Circuit ordered en banc review in Therasense to consider whether “the materiality-intent-balancing framework for inequitable conduct [should] be modified or replaced?” and “if so, how?” The Federal Circuit’s decision in Therasense, or the Supreme Court’s determination if certiorari is sought and granted after the Federal Circuit decision, will likely determine standards of proof of inequitable conduct in patent cases for decades to come. [The substantive elements of “inequitable conduct” are: “(1) an individual associated with the filing and prosecution of a patent application made an affirmative misrepresentation of a material fact, failed to disclose material information, or submitted false material information; and (2) the individual did so with a specific intent to deceive the PTO. See Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed.Cir.2008); Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178, 1181 (Fed.Cir.1995); 37 C.F.R. § 1.56 (2008).” Exergen Corp. v. Wal-Mart Stores, Inc., 573 F.3d 1312, 1327 n.3 (Fed. Cir. 2009).]
A patent creates a publicly sanctioned monopoly—a right to exclude others from making, using or selling a claimed invention. [Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 149, 150 (1989); 35 U.S.C. § 154 (2006). The Patent Clause grants Congress only limited power to create patent monopolies. U.S. Const. art. I, § 8, cl. 8; see Bonito Boats, 489 U.S. at 146.] The doctrine of “inequitable conduct” was judicially crafted to ensure that the “special privilege of a patent monopoly”[Morton Salt Co. v. Suppiger Co., 314 U.S. 488, 492 (1942)] is not procured fraud or other conduct that should disable a patentee from enforcing patent rights. In an early case, the Supreme Court determined that a patentee seeking to enjoin infringement of a patent must have clean hands:
This Court has declared: "It is a principle in chancery, that he who asks relief must have acted in good faith. The equitable powers of this court can never be exerted in behalf of one who has acted fraudulently or who by deceit or any unfair means has gained an advantage. To aid a party in such a case would make this court the abetter of iniquity."[Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933), quoted in R. Goldman, Evolution of the Inequitable Conduct Doctrine in Patent Cases, 7 Harv. J. Law & Tech. 37, 47 (1993)]
Implicit in the Constitution’s Patent Clause is the principle that “free exploitation of ideas will be the rule, to which the protection of a federal patent is the exception.”[Bonito Boats, 489 U.S. 141, 151 (1989); Graham v. John Deere Co., 383 U.S. 1, 5 (1966); Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248 (1850)].
The far-reaching social and economic consequences of a patent, the Supreme Court has said, “give the public a paramount interest in seeing that patent monopolies spring from backgrounds free from fraud or other inequitable conduct and that such monopolies are kept within their legitimate scope.”[Precision Instrument Manufacturing. Co. v. Automotive Maintenance Machinery Co., 324 U,S. 806, 816 (1945). See Goldman, at 50. See also Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1315 (Fed. Cir. 2006). See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 175, 176 (1965)]
Application of these principles has proven more difficult for the courts than, at first, it might have been imagined. The Patent Act of 1952 seemingly recognized the court-fashioned inequitable conduct doctrine, in Section 282, which allows a defense against patent infringement allegations based upon “uneforceability,” but which provides no further guidance. Over the years following enactment of the Patent Act, but before creation of the Federal Circuit in 1983, the courts developed several standards to assess whether inequitable conduct had been established, including standards for materiality and intent, in judging whether a fraud had been perpetrated on the United States Patent and Trademark Office during patent the process of obtaining a patent (prosecution and examination).[See Goldman, at 53–67] This may simply be a reflection of the common-law notion that the “law does not define fraud; it needs no definition; it is as old as falsehood and as versable as human ingenuity.”[Weiss v. United States v. McGuire, 122 F.2d 675, 681 (5th Cir. 1941)]
The basics were announced by the Federal Circuit, however, in a 1983 decision: "Establishing that a patent was procured by fraud or with such egregious conduct as to render it unenforceable requires clear, unequivocal, and convincing evidence of an intentional misrepresentation or withholding of a material fact from the PTO.”[Orthopedic Equip. Co. v. All Orthopedic Appliances, 707 F.2d 1376, 1383 (Fed. Cir. 1983); Goldman, at 69] Over time, several often conflicting decisions were rendered that appeared to make the sufficiency of proof of intent depend on materiality, or otherwise render the inequitable conduct easier to establish.[See C.A. Cotropia, Modernizing Patent Law’s Inequitable Conduct Doctrine, Berkeley Tech. L. J. 24:773, 776 (2009)(the “‘bleed through’ from the materiality finding is responsible for most of the intent doctrine’s current ambiguity.”)]
By 1988, the Federal Circuit began to complain that "the habit of charging inequitable conduct in almost every major patent case has [been] an absolute plague."[Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed. Cir. 1988)] In the decades since, these complaints have been frequently echoed in other Federal Circuit decisions, and by patentees who have sought legislative relief in the course of debates about a Patent Reform Act. In Therasense, the patent bar has hope that the Federal Circuit may make better sense of prior decisions, Patent Office regulations and a variety of other relevant factors.
The Therasense Facts and Initial Opinion
The patent in Therasense covered disposable diabetes glucose test strips, which measure the level of glucose in a sample of blood, usually a single drop. A prior art patent, U.S. 4,545,382 (the’382 patent), issued to the same inventors, disclosed strips as follows: “Optionally, but preferably when being used on live blood, a protective membrane surrounds both the enzyme and the mediator layers, permeable to water and glucose molecules.”
In the EPO, Abbott was faced with possible revocation of a European counterpart to Abbott’s ‘382 patent, EP 0 078 636 (the ’636 patent), a patent “with virtually identical specifications.” The ‘636 patent was revoked as obvious over a German reference. In the EPO, Abbott argued that the ‘636 patent was distinguishable from the German reference because the “optionally, but preferably” language in the EU ‘636 patent, identical to the language in the US ‘382 patent, was “unequivocally clear” and that the “protective membrane [described in the EU ‘636 patent] is optional, however, it is preferred when used on live blood.”
Abbott pursued the patent for thirteen years in the USPTO through several continuation applications that were repeatedly rejected for anticipation and obviousness, including rejections over the prior art ’382 patent. However, none of the EPO statements and proceedings was disclosed to the PTO. At some point, new claims were drafted including electrochemical sensors lacking a membrane. Abbott argued that they were novel because they taught a sensor that “did not require a protective membrane when testing whole blood.” Abbott argued that “optionally, but preferably” would not have been read by a PHOSITA to confirm that “a membrane is not necessary when testing live blood in vivo or whole blood in vitro.”
In litigation over the US patent, the trial court found that Abbott’s EPO statements directly contradicted its representations to the PTO. By describing the “‘[o]ptionally, but preferably’ language as ‘unequivocally clear,’” in the EPO, Abbott contradicted representations to the PTO that a PHOSITA would have understood the words as mere “patent phraseology” that “did not convey a clear meaning.” Rejecting the prosecuting attorney’s testimony, the trial court stated: This argument conveniently overlooks the fact that he consciously chose to withhold. Counsel who steer a course toward obtaining a strong patent should err on the side of disclosure, not nondisclosure. And, it must be said, after so many rejections over so many years, it seems clear that Abbott’s primary goal was to eke out some claim, saving a fight over enforceability for a later day.[Therasense, Inc. v. Becton-Dickinson and Company, 565 F.Supp. 108, 1113-15 (N.D. Cal. 2008)]
The inventor disclosed the inconsistent EPO information to the patent prosecutor, and “made direct representations to the PTO—representations that were materially misleading by omission.” Thus “he was obligated to avoid intentional deception,” and was “duty-bound to avoid making an intentionally misleading submission, whether or not he told [the prosecuting attorney] about the inconsistency.”[Therasense, Inc. v. Becton-Dickinson and Company, 565 F.Supp. 108, 1115 (N.D. Cal. 2008)]
The trial court found that the patentee’s “explanations for withholding the EPO documents were so incredible that they suggested intent to deceive.”[Therasense, Inc. v. Becton-Dickinson and Company, 593 F.3d 1289, 1306 (Fed. Cir. 2010)]
The initial Federal Circuit panel commented that these factual findings were based on assessments of credibility that are “virtually unreviewable” and were “amply supported,” adding that, even under the clear and convincing evidence standard, there was no error in the trial court’s finding of bad faith, or intent to deceive the PTO. The panel found the withheld EPO information to be “highly material,” stating that, to “deprive an examiner of the EPO statements — statements directly contrary to Abbott’s representations to the PTO — on the grounds that they were not material would be to eviscerate the duty of disclosure.” It affirmed the trial court’s judgment, holding the Abbott patent unenforceable for inequitable conduct. .”[Therasense, Inc. v. Becton-Dickinson and Company, 593 F.3d 1289, 1305-08 (Fed. Cir. 2010)]
The Therasense En Banc Argument
Prior to argument of Therasesnse before the Federal Circuit en banc, it was widely assumed that the court would continue to by narrow the range of cases in which inequitable conduct may be asserted, for example by reinvigorating a “but for” test of materiality, or by enhancing the type of required proof of intent.[See, e.g., Exergen]
A critical moment occurred during questioning of Abbott’s counsel (the patentee), in rebuttal. The Court asked whether the challenged conduct would “satisfy the but-for causation test?” The “but for” causation test is, of course, standard fare in fraud cases.[See, e.g., Martens Chevrolet, Inc. v. Seney, 292 Md. 328, 333 (1982); Impala Platinum Limited v. Impala Sales (USA), Inc., 283 Md. 296, 323 (1978); McAleer v. Horsey, 35 Md. 439, 454 (1871); Maryland Civil Pattern Jury Instructions, 11:1 (2d Ed., 1984)(elements of cause of action for fraud include proof that “but for” a concealment or misrepresentation, a plaintiff would not have done the thing from which his damages resulted)] The reply by Abbott’s counsel was necessary: the challenged conduct would not meet the “but for” test.[Transcript of Argument, http://www.patentlyo.com/files/therasense-v-becton---transcription.pdf, Tr. 55, lines 14-16] An opposite answer may have ensured affirmance. However, if the conduct challenged in Therasense did not satisfy the “but-for” causation test, almost no case would.
The probable result of Therasense is far from clear, if it ever was. It seems likely that the Federal Circuit will not depart from previous cases that have imposed “fraud like” standards on pleading and proof in cases in which inequitable conduct is alleged. On the other hand, the court may not require proof of “but for” causation.
Return to the standards of proof of fraud imposed in other civil cases, including cases under state common law and federal civil statutes would harmonize patent law with other jurisdprudence andwould enable trial court judges, who are likely more familiar with a variety of other fraud laws, to apply well known principles with far greater confidence that their judgments will not be revisited or reversed on appeal. For example, adoption of such well-known fraud standards would permit imposition of liability for inequitable conduct not only on the specific “individuals associated with the filing and prosecution of a patent application,” but also, under developed standards, on those corporate assignees of patent applications which, in total, may know and have a duty to disclose more than such individuals. [See, e.g., New York Central & Hudson River Railroad Co. v United States, 212 U.S. 481, 493, 29 S.Ct. 304, 306 (1909), quoting Telegram Newspaper Co. v. Comm., 172 Mass. 294, 52 N.E. 445, with approval (“We think that a corporation may be liable criminally for certain offenses of which a specific intent may be a necessary element. There is no more difficulty in imputing to a corporation a specific intent in criminal proceedings than in civil. A corporation cannot be arrested and imprisoned in either civil or criminal proceedings, but its property may be taken either as compensation for a private wrong or as punishment for a public wrong.”); and United States v. Bank of New England, 821 F.2d 844 (1st Cir. 1987). See also United States v. T.I.M.E.-D.C, Inc., 381 F. Supp. 730,738 (W.D. Va. 1974)( "Corporations compartmentalize knowledge, subdividing the elements of specific duties and operations into smaller components. The aggregate of those components constitutes the corporation’s knowledge of a particular operation. It is irrelevant whether employees administering one component of an operation know the specific activities of employees administering another aspect of the operation … Rather, the corporation is considered to have acquired the collective knowledge of its employees and is held responsible for their failure to act accordingly.")] Moreover, adoption of such well-established common law standards would permit imposition of liability for inequitable conduct in cases of reckless or deliberate indifference.[See SEB S.A. v. Montgomery Ward & Co., et al., 594. F.3d 1360 (Fed. Cir. 2010), cert. granted 131 U.S. 458 (2010)(argued February 2011). Deliberate indifference requires (1) an "awareness of facts from which the inference could be drawn that a substantial risk of serious harm exists" and (2) the actual "drawing of the inference." Elliott v. Jones, 2009 U.S. Dist. LEXIS 91125 (N.D. Fla. Sept. 1, 2009)]
To adopt well-established common law fraud principles in toto, in patent cases in which inequitable conduct is alleged, would bring the specific conduct at issue in Therasense within well established boundaries for assessment of responsibility for intentional non-disclosure or fraud. Adoption of such standards will have the salutary effect of importing into patent litigation concepts that have been well developed by other litigants in both civil and criminal cases. It will help to bring about the certainty for which litigants have searched for decades, and it may even help to vaccinate the patent litigation system against the “absolute plague" of inequitable conduct allegations. Time will tell whether the forthcoming decision in Therasense makes sense.
SpicyIP is pleased to announce the dates for three related IP events in Hong Kong and Macau. The events are being organised by the Institute for European Studies of Macau and Maastricht University Faculty of Law. For the Hong Kong leg it is co-organised by the Chinese University of Hong Kong.
There are substantial concessions for Indian students and the fee details are as follows:
Fees inclusive of accommodation for students from India:
Up to 4 students from each University
- US$ 800 for each student
- Over 4 students: 10% discount for every fifth;
- Over 5 students: 20% discount for every sixth student
Event 1: The Intellectual Property Law School - 16 until 20 May 2011
The IP Law School is an initiative in Asia offering a taught programme in international Intellectual Property Law and its relevance for global, European and Asian economic development and innovation policy.
"The IP Law School is extremely suited for trainee lawyers, Intellectual Property professionals with an economic or policy background, and master students in Intellectual Property wishing to enhance their skills at post-academic level. Starting from the basics of the Paris and Berne conventions, the course covers the development of Intellectual Property Law all the way to the WTO TRIPS Agreement and the WIPO Copyright treaties. Attention is also devoted to regional arrangements, such as the European Patent Convention, and other new international and national initiatives. From a policy perspective free trade agreements and bilateral investment arrangements covering Intellectual Property, as well as ongoing negotiations in the area of protection of traditional knowledge will be covered."
Classes are offered in an intensive Socratic format in the course of one week by experts in the field.
Event 2: Annual Professional IP Update, followed by the 12th Annual IEEM IP Seminar, May 21-24
The Annual Professional Update provides an overview of all relevant cases and legislative developments of the past year from all over the world. During one day you will be brought up to speed on the major important legal decisions and developments in intellectual property law and policy.
Location for Saturday 21 May: Graduate Law Center of the Chinese University of Hong Kong
Event 3: The 12th Annual IP Seminar of 2011
The topic will be: Consumers, Facilitators, and Intermediaries - IP Infringers or Innocent Bystanders?
The two-days Annual Intellectual Property Seminar offers a forum for IP professionals wishing to be part of a thought-provoking discussion on cutting-edge developments in intellectual propety law and policy. Distinguished practitioners, judges and academics from all over the world have contributed to this event. The papers they have presented have been published in book form by Kluwer Law International and Hart Publishing.
A group of distinguished speakers has been confirmed to speak on issues such as ISP liability, unwarranted threats to primary and secondary infringers, contributory and secondary liability for patent and copyright infringement, Google ads and trademark infringement, liability for transporters and freighters, time and geo-shifting devices and services, eBay and trademark infringement, and the impact of sporting events legislation on the public sphere.
Location for 23-24 May: Sofitel Macau at Ponte 16, Macao
Speakers include inter alia: Graeme Austin, (Victoria University of Wellington), Irene Calboli (Marquette University) Christopher Heath (EPO), Byung-Il Kim (Hanyang University), David Llewelyn (Singapore Management University and King's College, London), Jan Nordemann (University of Berlin), Anselm Kamperman Sanders (Maastricht University), Sylvie Nérisson (MPI, Munich) , Tasuhiro Ueno (University of Tokyo), Bryan Mercurio (Chinese University of Hong Kong). They will be joined by local Hong Kong and Macau practitioners.
For additional details you can visit their website here.
Friday, March 25, 2011
The New York Times carried a fairly balanced piece describing the genesis of the dispute between Enercon GmBh and the Mehra Group; a dispute which eventually cost Enercon GmBH 12 of its patents which were successfully challenged before the IPAB. It also speculates that the dispute may have clouded India’s image in Germany as a favourable investment destination especially since the dispute has been widely covered by the German press. Enercon GmBH’s lawyer Mr. Knottnerus-Meyer has been quoted as saying that his company considers the joint-venture – Enercon India – as a lost investment despite owning the majority stake and that, they do not seek to re-enter the Indian market. As of now it appears that they only want to protect their patents and trademarks in India without conducting any business over here. The NYT piece however balances this out by pointing to Enercon’s history of misadventures in the U.S. wherein they tried suing for patent infringement and ended up being barred from the U.S. market for a few years. Add to this their misguided adventure in the U.K. where they tried to sue for infringement but ended up having their patents revoked and I’d be tempted to claim that Enercon’s karma has come back to bite them in their backside.
The Financial Times reports that the dispute has the potential to disrupt Indo-German economic ties especially since the German Trade Minister has already written to the Indian Commerce Minister warning him of the same.
The piece in the German Times repeats the same old nonsense about how the revoked patents were considered inventive in other jurisdictions like the U.S., Europe and Japan. The journalist was obviously not aware of the U.K. case where Enercon GmBH actually admitted to its own patents being invalid! The German Times also reveals that an industrial spy was arrested from one of Enercon’s German plants and eventually convicted for industrial espionage.
All three pieces also report on something which I was unaware of until now and that is the fact that the Mehra Group had filed a police complaint in the year 2009 against the management of Enercon GmBH and that the Mumbai Police actually took in two Germans for questioning on charges that they were conspiring against the wealth of the Mehra Group. Nobody was however arrested. A search of the Bombay High Court website reveals that Enercon’s subsequent writ petition led to a landmark judgment in criminal law. The judgment is available over here and it names both Dr. Wobbens and his lawyer Mr. Knottnerus-Meyer as the petitioners, which I guess means that they were the accused. The Bombay High Court is yet to decide whether the police can even begin an investigation against the Germans. The High Court is empowered to quash any police investigation if it finds that it is being conducted without any real basis in law.
It is most unfortunate that the Mehra Group involved the police in this commercial dispute. It is even more unfortunate that the idiotic laws of this country allow for such police investigations into what are primarily commercial disputes that should be the subject of civil courts and not police stations. Patent revocations are eminently defensible, criminal investigations into a shareholder tiff are not as defensible, atleast to an international audience. I wouldn’t really blame German companies who think a thousand times before entering the Indian market.
Wednesday, March 23, 2011
After a significant lull in the updates on the Google Book Settlement, the long-awaited decision has finally come through, putting to rest the $125 million deal, in its current form which was unsurprisingly challenged by rivals of the search giant, civil society organisations, academics and foreign governments (including India).
The settlement allowed Google to scan books, index them and feed them as results based on search queries. There were several grounds of objections to such a move, and the District Court's decision appears, on the face of it, to be grounded in these protests. For one, there was a great deal of concern about the anti-trust implications of allowing a single business venture to have the legal right to digitise and display the book online. Secondly, there were important reader's privacy issues raised and lastly, the possibility that Google could claim "orphan" works was another bone of contention, since it would give the company an effective monopoly over unclaimed books.
I will follow up with a post later tonight after reviewing the decision in full, in an attempt to chart out the grounds for the decision and a brief analysis as well.
Tuesday, March 22, 2011
Image from here.
IN THE HIGH COURT OF DELHI AT NEW DELHI
CS (OS) 523/2010
I.A. Nos.3714, 6065 and 12765/2010
BAYER CORPORATION and ANR ..... Plaintiffs
Through: Mr. Sudhir Chandra Aggarwal, Sr. Advocate with Mr. Sanjay Kumar and Ms. Arpita Sawhney, Advocates.
CIPLA LTD ..... Defendant
Through: Ms. Pratibha M. Singh with Ms. Saya Choudhary, Advocates.
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
O R D E R
With the consent and assistance of the learned counsel for the parties, the following are framed as questions/points, on which scientific experts appointed by the court would enquire into and render assistance through their report: -
(i) Whether the defendant?s formulation 'Soranib' in its chemical constituents and other essential ingredients is identical or so closely similar to the plaintiffs? formulation Sorafenib (covered by Indian patent no.215758) as to lead to the same results/therapeutic effects.
ii) Whether in view of the disclosures contained in US 5773459 and US 4904668 can compounds of claim 1 of Indian Patent No.215758 of be arrived at?
(iii) If answer at point 2 is in affirmative, whether a person skilled in the art, on a combined reading of US 5773459 and US 4904668 will clearly predict that urea derivatives wherein one of the N atom bears a chlorotrifluoromethyl phenyl substituent and the other N atom bears an N-methycarbamoyl pyridyloxy phenyl substituent (Sorafenib) will have the potential to exhibit anti-tumor properties?
(iv) Whether US 5773459 and US 4904668 provide motivation and expectation to a person skilled in the art to arrive at Sorafenib?
(v) Whether US 5773459 and 4904668 disclose urea derivatives and a chlorotrifluoromethyl phenyl substituent on one N atom and an N-methylcarbamoyl pridyloxy phenyl substituent on other N atom, the combinations of which will lead to a compound possessing anti-tumor activity?
(vi) Whether US 5773459 and US 4904668 teach and/or make it obvious to a person skilled in the art to arrive at Sorafenib which is also urea derivative bearing a chloro trifluoromethyl phenyl substituent on the N atom and an N- methylcarbamoyl pridyloxy phenyl substituent on other N atom of urea, claimed in the impugned suit patent?
(vii) Whether the substitution of chloro trifluoromethyl phenyl substituent for the N atom and an N-methylcarbamoyl pridyloxy phenyl substituent for the N atom of urea, obvious to a person skilled in the art?
(viii) If the impugned compound (Sorafenib) was obvious, would selection of a Tosylate salt of sorafenib be obvious?
(ix) Whether Sorafenib would be a mere obvious modification of compunds envisaged in US 5773459 and US 4904668?
(x) Whether the anti-tumor activity of compounds with the skeletal structure of urea bearing a chloro trifluoromethyl phenyl substituent on the N atom and an N- methyl carbamoyl pridyloxy phenyl substituent on the N atom, is known in view of the state of the art?
(xi) What is the routine procedure in drug designing when it involves selection of salt and the selection of substituents in a basic skeletal structure?
(xii) How will the cumulative information flowing from each of the aforesaid documents assist in the evolution of sorafenib?
This Court is of the opinion that in the event it is necessary to do so, at a later stage, in view of the submissions of the parties, further report and any question of fact or such supplementary enquiry may be conducted by one or more experts.
Learned counsel for the parties agree to prepare a joint compilation of all the documents on the record and furnish it to the scientific expert appointed by the Court. The fee of scientific experts is determined tentatively @ Rs.2.5 Lakhs each to be borne in equal proportion by the plaintiff and defendant/counter claimant. A copy of the order shall be furnished dasti to the parties as well as to the scientific experts by the Registry. The experts are requested to furnish their reports within eight weeks from the date of receipt of the compilation by them. The compilation shall be prepared and furnished to the experts within four weeks.
List on 23rd March, 2011, for directions.
S. RAVINDRA BHAT, J
DECEMBER 09, 2010
Monday, March 21, 2011
Sunday, March 20, 2011
I spoke immediately with that tireless crusader and one man army that goes by the name of DG Shah (Chairman of the Indian Pharmaceutical Alliance, an association of India's leading generic companies) and it now turns out that none of these companies had ever expressed this sentiment. Shah informs us that all the relevant head honchos (Glen Saldanha et al) have again reaffirmed their commitment to the IPA position paper, which we have now uploaded on the SpicyIP website. This paper opposes "data exclusivity" of any form.
I then spoke with the FE reporter in question, BV Mahalakshmi, who claims that her primary source for this story was a very senior OPPI official. And that her original story which contained more details and more sources had been chopped up by an editor. Prashant's earlier blog post covering the FE article had rightly noted this lack of citation of any source for the story.
OPPI (Orgn of Pharma Producers of India) represents the interests of drug originators and is dominated by Western multinational pharmaceutical firms. If what Mahalakshmi states is indeed true, was OPPI attempting to create mischief by leaking this falsehood in the midst of a highly contentious India EU FTA negotiation? Or was this a case of genuine belief that our generic biggies were interested in risking sanction under section 309 of the Indian Penal Code, a provision that criminalises an attempt to commit suicide?
Microsoft awarded Punitive Damages in Software Piracy Case: Autodesk, Inc. & Another vs Mr. Prashant Deshmukh & Others
(Image taken from here)
Facts of the case: Autodesk, Inc. (hereinafter “Plaintiff 1”) is a renowned U.S.-based design software and digital content company, providing design software to professionals, has several authorized resellers in India and also claims to be the owner of various trademarks in India, including AUTODESK and AutoCAD. Microsoft Corporation, (hereinafter “Plaintiff 2”) owns software such as Microsoft Windows and Microsoft Office and is almost a household name regarding computer peripherals. It also has a subsidiary company in New Delhi. The plaintiffs claim that the software developed and marketed by them are computer programs as per Section 2(ffc) of the Copyright Act, 1957 and also covered as ‘literary work’ as per Section 2(o) of the Copyright Act. Moreover, the rights of authors of member countries of the Berne and Universal Copyright Conventions are protected under Indian Copyright laws since both India as well as U.S.A. are signatory to both these conventions. Based on information regarding large-scale use of unlicensed/pirated software by the defendants, plaintiffs have alleged infringement of their copyright and trademark rights by the defendants.
Issues: Whether the defendants are guilty of having infringed the copyright and trademark right associated with the software that belong to the plaintiffs?
Remedies sought by plaintiffs: Injunction restraining the defendants from infringing the plaintiffs’ copyright and registered trademarks, damages of Rs.20 lakhs and rendition of accounts and delivery up of the unlicensed/pirated software contained in hard disks, compact disks, floppies etc.
Decision: The defendants never tried to contest the suit by filing a written statement. Evidence revealed that defendants 1 and 2 were not holding any license from Plaintiff 1, while defendant 3 (M/s Space Designers Syndicate) was a licensed user of AutoCAD LT 2005. Mr. Devesh J. Tiwari, the person who had informed the plaintiffs of the infringement, was an employee of M&S Consultancy Services (one of the defendants) as a computer service engineer. He revealed in the court that his employer company did not possess any legal licensed software and that his superiors were fully aware of the pirated software, including the Microsoft Windows 95/98 Operating System; Microsoft Office 97/2000 and AutoCAD Versions 12, 14 and 2000 etc. being used from printed CDs within the company. It was also contended on the plaintiff’s behalf that the word Microsoft has been continuously and extensively used by Plaintiff 2 since long and has come to be identified and recognized exclusively with Plaintiff 2.
The person-in-charge of the IT Department of the Legal Representatives of the plaintiff companies also testified that mostly all licenses used by commercial entities regarding plaintiff’s products can be used in perpetuity and that a software programme purchased by an entity anytime should reflect in the data base of the product purchase summary maintained by the plaintiff companies. Needless to say, the defendants’ names were conspicuously absent from that data base.
With regard to applicability of the Act to work first published in any territory outside India such as U.S., the court referred to Section 40 of the Act and also to paragraphs 2 and 3 of the International Copyright Order 1999 and held the provisions of the Act, especially S. 51 (dealing with infringement in the absence of a license), to be applicable vis-à-vis the rights associated with defendants’ products in this case. Moreover, as per S. 14 of the Act, the court believed that by using pirated versions of the software copyrighted by the plaintiffs, the defendants were certainly guilty of infringement, besides having also caused trademark infringement.
Regarding the issue of punitive damages in matters of piracy and infringement, reference was made to precedents such as Time Incorporated v. Lokesh Srivastava & Anr., 2005 (30) PTC 3 (Del), Hero Honda Motors Ltd. v. Shree Assuramji Scooters, 2006 (32) PTC 117 (Del), Microsoft Corporation v. Deepak Raval MIPR 2007 (1) 72, and Larsen and Toubro Limited v. Chagan Bhai Patel MIPR 2009 (1) 194, all of which favor the awarding of punitive damages for dissuading the infringers, even if the infringers decide not to appear in the suit proceedings at all. It was also argued that given the energy and resources spent by right-holders in infringement litigation, failure to award punitive damages would only foment encouragement for actions such as infringement and passing off.
The court also voiced concerns about increasing instances of piracy of software of reputed companies such as Microsoft and AutoCAD in the country, which might cause discouragement amongst the investors in the development of such software in the lack of dwindling license fees. Furthermore, the use of pirated software for commercial rather than personal purposes should, according to the court, be more heavily frowned upon, and therefore the court awarded the plaintiffs the permanent injunction sought for as also punitive damages amounting to Rs. 1 lakh against Defendant No. 2.
Saturday, March 19, 2011
P-PIL has featured on this blog in the recent past in connection with three IP matters.
1. It began its tryst with public interest law by co-ordinating and helping file a public interest litigation that questioned the constitutional competence of the Intellectual Property Appellate Board (IPAB), a petition that was admitted by the Chennai High court.
2. It then went on to submit representations to the Ministry of HRD asking that the principle of “reciprocity” be respected in relation to sound recordings and that the copyright act be amended to make this clearer. It also asked that section 45 of the copyright act mandating a no objection “trademark” certificate for artistic works be deleted, since it makes no policy sense. And may only contribute to engendering more corrupt practices at India’s trademark office.
P-PIL is now calling for student applications. If you are a law student and interested in leveraging your legal skills towards the achievement of public interest goals, please let us know. Thus far, we have focussed on IP matters, but will be branching out to other areas of law soon.
If interested working with us as a "research associate", please mail us at "joinus [at] p-pil.com" including do the following documents:
i) Your updated CV
ii) An essay on “Critically examine the issue of tribunalisation in India and spell out the various measures that you would take to improve tribunals in India, if you were the Law Minister.” [1000 to 1500 words]
iii) Please mail (a) and (b) to "joinus [at] p-pil.com"
iv) Please also fill this form:
Please submit all of the above before 3rd April, 2011.
If you are a legal practitioner, advocate, law firm, NGO or any other interested stakeholder who wishes to partner with us or work with us on matters, please drop us an email at "joinus [at] p-pil.com" indicating the nature of your interest.
For more info on P-PIL, please see our website (still a work in progress)