Mills & Reeve: Technology Law Update

Have you got designs for the future?

Last week the Queen told us that "A further Bill will make it easier for businesses to protect their intellectual property". The day after this announcement, a new Intellectual Property Bill had its first reading in the House of Lords. It primarily relates to design rights (both registered and unregistered) and notably changes the rules on first ownership of rights in designs - under the current drafting, commissioning the creation of a design will no longer automatically entitle you to ownership of the resulting design. 

This change will make the ownership rules applicable to designs more consistent with the ownership rules applicable to copyright. So, if the Bill is passed in its current form and you subsequently pay a designer to create a design, then in order to own all rights in the resulting design, you will need to obtain an assignment of these rights from the designer (unless the designer is one of your employees).

A general debate on all aspects of the Bill is scheduled to take place in the House of Lords on 22 May.  We will follow this with interest.

Does browsing the web make you a copyright infringer?

The UK Supreme Court recently considered an interesting appeal in Public Relations Consultants Association Limited v The Newspaper Licensing Agency Limited and others, concerning the status in copyright law of temporary copies of web pages held in an internet browser cache or on the screen of end users reading those pages. Although on the face of it this is a fairly esoteric topic, it has made it this far through the judicial system because the outcome has significant commercial implications for interested parties (primarily web publishers) and significant public policy implications.

At first instance, and then by the Court of Appeal, it was held that without a licence, the end-user was breaching copyright by storing temporary copies of web pages, if they received headlines and extracts from those web pages via the third party aggregator involved - Meltwater.

Meltwater provided PR professionals (members of the Public Relations Consultants Association Limited – referred to collectively as PRCA members) with a web monitoring service, monitoring news articles on PRCA members’ clients. Meltwater created monitoring reports with the opening words of the article, the keyword (and several words on either side) and a hyperlink. Meltwater is licensed by the NLA to create and distribute the reports, and it had previously been agreed that the PRCA members would need an end-user licence to view articles on monitoring reports sent from Meltwater by email (essentially because an email is not a temporary copy so could not fall within the scope of Article 5(1) Copyright Directive – more below).

The other method of viewing the reports was on Meltwater’s website – in practical terms this technically involves creating further copies of the article extracts, in the PRCA member’s browser cache. Is that unlawful copying for copyright purposes?   

The answer lies in the scope of the exception provided under Article 5(1) of the Copyright Directive (Directive 2001/29/EC), which allows temporary copying (which would otherwise be infringing copies) provided certain criteria are met. The copy must:

• be transient or incidental; 
• be an integral and essential part of a technological process;
• have no independent economic value; and
• its sole purpose must have been to enable a lawful use or transmission in a network between third parties.

The Supreme Court analysed the various elements of this test, and came to the conclusion that cached browser copies of web pages are copies that should fall within the Article 5(1) exception. Above all, the Court accepted that, as a statement of the current state of the art, temporary copying is essentially how web browsing works – it is an essential part of current browser technology (although this may not always be the case). The same is true of web search – Google (with some exceptions) caches web pages on its servers, and searches against that cache. 

The exception does not extend to downloading or printing web pages (and retaining or distributing the resulting digital or paper copy). As the Court recognised, “if it is [copyright] infringement merely to view copyright material, without downloading or printing out, then those who browse the internet are likely unintentionally to incur civil liability […] by merely coming upon a web-page containing copyright material in the course of browsing […] which would make infringers of millions of [internet users] across the EU…”

In an interesting aside, which really gets to the nub, the Court noted that the licence fee which should be payable by Meltwater to the NLA may well reasonably be higher than it currently is, if the PRCA members do not need (and so have not paid for) their own licences to view the article extracts where the reports are accessed via Meltwater’s website. So although this decision may not go the NLA’s way, it might ultimately get the commercial outcome it is after.

Going back to those millions of internet users like you and me, the Supreme Court decided that the European Court of Justice ought to clear this up once and for all and has accordingly made a reference for a decision on the scope of Article 5(1) in relation to cached copies of web pages.

Does the UK need more investment in R&D?

I've just had an article (written by the BBC's tech correspondent Rory Cellan-Jones) pointed out to me, which questions why the UK, and Cambridge in particular, doesn't have more 'world-class technology companies', given its big role in the history of the computer.

The article does go on to mention some big Cambridge success stories (ARM, CSR and Autonomy) and how the introduction of the Raspberry Pi may be the first step to ensuring a new generation of computer science enthusiasts, but the basic suggestion seems to be that there is not enough investment in the UK in:

1. R&D generally (1.7% of GDP in the UK, as compared to 2.8% in Germany and 2.9% in the United States); and

2. Tech companies - once they want to move on from small start up to the next stage, they are often 'selling up to big American firms' (this from Dr Mike Lynch, Autonomy's founder who sold on to HP of course).

So, is there anything that can be done to improve this situation? One suggestion was for the UK government to 'think more about using its own procurement budgets to help UK firms in the way the US did'. This may however be difficult - you'll probably be aware that the European Commission recently failed to approve a planned tax break for the video games industry (for games where more than 80% of production was in the UK) on the grounds that 'no obvious market failure' in competition needed to be addressed (see article here). On that basis, would an attempt by the government to ensure more business for UK tech companies be seen by the EU as an attempt to unfairly distort competition?

We'd like to hear your thoughts on this...

Court of Appeal raids the Patents Court for intellectual expertise

Yesterday saw the formal appointment of another patents judge to the Court of Appeal.  The Lord Chief Justice's Court was packed with other judges, members of the Bar, Solicitors and Patent and Trade Mark Attorneys welcoming Sir Christopher Floyd's elevation to the Court.  The Lord Chief Justice and Henry Carr QC (11 South Square, Sir Christopher's former chambers) gave strong speeches of support; the LCJ recording his past service amongst other things no Bar Committees and the Copyright Tribunal; Henry Carr added congratulations on Sir Christopher escaping having to handle "on his own" rafts of Smart Phone litigation (eg here and a selection here), where he was facing multiple large teams of practitioners putting forward their complex arguments, also adding just a careful and restrained sprinkling of anecdotes -- no doubt mindful of future appearances.  Sir Christopher will be a sad loss from the Patents Court; he will be a valuable addition to the Court of Appeal following the retirement (or part retirement) of Sir Robin Jacob.  His appointment is a reminder of the calibre and strength of UK judges in the intellectual property field, keeping the UK Courts as an attractive forum for both UK and international litigation -- a point alluded to by the LCJ, perhaps a basis on which the UK judiciary should be awarded the Queens Award for services to export.  Congratulations.

Younger UK IPO Mediation Service

Lord Younger, the Intellectual Property Minister, announced today that the UK IPO Mediation Service, which was established in 2006, is to be modernised.  The aim if to make resolving intellectual property disputes outside of the Courts cheaper and quicker for small businesses.

Some of the changes include a reduction in mediation fees, options for mediation which include short telephone sessions and access to mediators who specialise in a wider range.

The UK IPO’s Mediation Service resources can be accessed here.

Covert recordings may be admissible in Employment Tribunals

As technology becomes more sophisticated, so do the challenges faced by employers.  A seemingly common query relates to the legality of covert recordings made by employees of face to face meetings with managers or colleagues on smart phones or tablets.

In Vaughan v London Borough of Lewisham and others, the Employment Appeals Tribunal (EAT) made clear that covert recordings are not inadmissible in Employment Tribunal proceedings merely because they were obtained in a clandestine or distasteful manner.

In this particular case, involving an employee claiming to have been subjected to unlawful disability discrimination, “dozens” of covertly recorded conversations were held inadmissible but only because their relevance to the legal issues in dispute was unclear.  The employee was invited to submit a new application to admit specific and relevant recordings, with an indication given that these may be held admissible.

The scope for objecting to the use of covert recordings of face to face meetings in Employment Tribunals is limited, notably where the private life of those unaware that the conversation was being recorded is not discussed.

Whilst flagging the willingness of employees to deploy covert recordings as evidence in Employment Tribunal proceedings, this case highlights the importance of training managers how to manage and employees how to conduct themselves appropriately in the workplace.

Whilst technology leaps forward, the old adage that a person should never say anything that they would not wish to have repeated has perhaps never been more true. 

Since it is impossible for employers to police what their employees do or say at all times, employers should consider prohibiting covert recordings at work, with any such conduct leading to disciplinary action. 

IP-related business support initiatives

As the UK works its way through the economic downturn, the Government are introducing lots of incentives to try to encourage entrepreneurs and businesses to set up shop and stay in the UK and, more importantly, to pay UK taxes. 

The UK IPO has recently published a factsheet providing an overview of the IP-related business support initiatives and financial incentives available to SMEs in the UK, which includes information in relation to:

-          The Growth Accelerator

-          The Patent Box

-          The Design Council’s Design Leadership Programme

-          UKTI’s Passport to Export

-          The Technology Strategy Board’s Catapult Centres, SMART initiative and Innovation Vouchers

-          The Manufacturing Advisory Service

-          Pro Bono advice clinics organised by the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys

-          The EPO Patent Libraries

-          The British Library’s Business and IP Centre

-          and the IPO’s own IP Masterclasses, Get It Right First Time seminars, IP Healthchecks, IP Insight newsletters, Mediation Service, Opinion Service, and IP Audit Scheme.

Anything ICANN do for trade mark protection

Yesterday evening I attended a talk by Tony Willoughby on domain name disputes, which gave an interesting insight into the process of enforcing your trade mark rights under the current Nominet and ICANN procedures. Prior to the talk the topic of conversation included the introduction of new generic top-level domains, or gTLDs, by ICANN and the potential impact on trade mark owners (and their purses) an increased number of suffixes might have.

Following the announcement in June 2011 that gTLDs were going to be opened up to .anything, .everything and .everyone, as summarised on our previous Naked Law blog post, ICANN announced earlier this week that there will be a further opportunity for trade mark owners to protect their rights.

From 26 March 2013, rights holders will be able to submit their trade marks for verification to the Trademark Clearinghouse. Once independently verified by the Clearinghouse the trade mark owner will have the opportunity to register their trade marks as domain names for each new gTLD before the general public. They will also benefit from an alert service which will notify the trade mark owner when a domain name is registered that matched the trade mark in the Clearinghouse register.

The proposed cost is $150 for recording one trade mark for one year. Trade mark owners are however likely to face additional costs if they decide to register additional domains and the alerts service appears to work like current trade mark watch services, leaving it up to the trade mark owner to decide whether to pursue the registrant in order to obtain the offending domain name.

Foxed Fox: Tough copyright remedy confirmed extinct.

Copyright infringers always have to fear the criminal law.  An even more potent sanction was “conversion” damages.  The copyright owner was entitled to treat the infringing goods as his own, and when the infringer disposed of the infringing goods, to treat ALL the proceeds of sale as belonging to him.

Alas for a Fox; for in Twentieth Century Fox v Harris ([2013] EWHC 159 (Ch)) the UK High Court has confirmed that this remedy no longer exists.  Following  Mr Harris’ defeat in the Newzbin case ([2010] EWHC 608 (Ch)), in which Newzbin were found to have “engaged in a deliberate course of conduct well knowing that the vast majority of the materials in the Movies category … are … likely to be protected by copyright and that the users of Newzbin who download those materials are infringing that copyright”, Mr Harris set up Newzbin2, apparently not having learnt a sufficient lesson the first time.  Fox argued that they were entitled to damages on the basis of infringement of a property right – like (unlawfully) selling the copyright owner’s car: Fox should be entitled to claim all the proceeds of sale (without regard, of course, to any costs Mr Harris had incurred).  Fairly short shrift was given to the argument.  The remedy was abolished by the Copyright Designs and Patents Act 1988 when it no longer provided for conversion damages (section 96).

Copyright owners of course can still rely on an entitlement to damages reflecting the flagrancy of the infringement and in Performing Rights Society Ltd v Burns and another [2012] EWHC 221 (Ch), a fair estimate was assessed at 3 times the charge which would otherwise have been made for use of the copyright work or Beals Mortgage v First Global Financial Services ([2012] EWHC 3761 (QB) para 174, 175) where twice the usual damages was appropriate; or for an account of profits, .  This ought to make it unprofitable for the infringer to carry out the infringement.  Alternatively, they can turn to the criminal law.

The Unified Patent Court Agreement is signed. A pan-European (minus) patent is in sight?

Yesterday was a historic day.  The Agreement for a Unified European Patent Court has been signed, after months of wrangling.  Several European Presidents have sought it as a feather in their cap, and have not quite made it.  But at last political energy has overcome commercial misgivings -- at least to get a signature.  We still have to wait for the agreement to be ratified - by 13 Member States, including France, Germany and the UK (the three largest patent filing countries in the EU).  Poland (amongst a small group of other countries) have not yet signed, believed to be because they have a report that it does not make good economic sense.  Pressure will grow in the UK for a full economic impact assessment to be carried out before ratification.

The Agreement provides for a "single" court for Unified Patents (Regulation adopted in 17 December 2012 -- but with still some significant hurdles like how it is financed) and for EPC Patents, unless they are opted out.  The Court will have national and, for some groups of countries, regional divisions, as well as a central division divided between France, Germany and the UK. 

The procedural rules are substantially drafted, and will be subject to consultation shortly.  One area which is sure to crop up is the impact of the arrangements on legal professional privilege: companies are concerned that these could put them at risk of discovery applications in relation to the USA, to such an extent that, unless this is resolved, some companies are considering only applying for national patents in Europe. 

The aim is to have a relatively short and low cost procedure, which will make decisions applicable throughout the EU.  Good for EU wide businesses, but could be a deteriment to businesses primarily operating in one Member State.  More details and comments later.