Star Trek™ Axanar Lawsuit Proceeding to Trial

Last week, a United States judge denied motions by both the plaintiffs and defendants in a copyright lawsuit involving the Star Trek Axanar fan production. The fan production has crowdsourced considerable funding, and aims to make a “professional production” “with a fully professional crew, many of whom have worked on Star Trek itself”.

One of the key findings by the judge is that the defendants are unable to rely upon a fair use defence, if they are found to have infringed the plaintiffs’ copyright. The defendants had argued that the work is a non-commercial parody, and as such should be permitted under fair use. However, the court rejected both arguments, and found the work was commercial, and not a parody. The matter is now scheduled to more to a jury trial, starting at the end of the month.

Full Decison
Read More

 

 

CIPO to Invite Owners of Registered Trademarks to Voluntarily Classify Goods and Services

In December 2016, the Canadian Intellectual Property Office (CIPO) will begin sending courtesy notices inviting owners of registered trademarks to submit Nice classifications for the goods and services listed in the registration(s). The notices are in response to amendments to the Trade-marks Act that are projected to come into force in 2018.  The amendments will require applicants to classify goods and services according to the Nice classification system.  Since it remains unclear as to when the amendments requiring Nice classifications will come into force, the notices will not include a response deadline. The notices are to be sent to registered owners of trademarks that are subject to renewal as of 1 January 2018.

 

Obama Administration Releases Strategic IP Enforcement Plan

The Obama administration released a three-year strategic plan for intellectual property (“IP”) enforcement earlier this week. The 163-page plan, entitled “ Supporting Innovation, Creativity, & Enterprise: Charting a Path Ahead ”, seeks to guide the work of the U.S. government in support of IP enforcement. Its goals include:

1. enhancing national understanding of the economic and social impacts caused by misappropriation of trade secrets and the infringement of IP;
2. promoting a safe and secure Internet by reducing counterfeiting and IP-infringing activity online;
3. securing and facilitating lawful trade; and
4. enhancing domestic strategies and global collaboration in favour of effective IP enforcement.

The plan not only sets the framework for the work to be carried out, but also calls on nations, industry, and other stakeholders to provide leadership and a collaborative approach to combat IP infringement.

For more information, the White House’s summary of the plan can be found here.

Read More

Samsung Succeeds at the US Supreme Court in Design Patent Dispute with Apple

It may be Samsung’s lucky day, as the Supreme Court of the United States has unanimously reversed a $399 million judgment awarded to Apple in respect of design patent infringement by Samsung. The decision is a technical one, having to do with the manner in which profits for infringement of a US design patent can be assessed. The Supreme Court determined that the Court of Appeals for the Federal Circuit (CAFC) had incorrectly assessed damages based on sales of the smartphones sold by Samsung, on the rationale that consumers could not separately purchase the infringing components of the smartphones. Samsung is not off the hook, however, as the case has been remanded back to the CAFC for reconsideration in view of the Supreme Court’s ruling that damages for design patent infringement can potentially be assessed based on infringing components of the smartphones, even though those components are not sold separately.

Read More

Patent-Pending Systems for Weeding Out Fake News

Many Internet and social media sites are taking action to address the propagation of fake news, in view of concerns following recent events in the United States. However, some companies were developing possible solutions before the recent spotlight on fake news. For example, Sony’s pending US Patent application for systems and methods for generating journalistic veracity information was published on November 10, 2016.

Read More

Canadian Intellectual Property Office Issues Practice Notice On Geographic Names

The CIPO recently issued a Practice Notice clarifying its practice regarding applications to register geographic names as trademarks. Examiners will consider a trademark to be “clearly descriptive”, and therefore prohibited, if the trademark is a geographic name and the associated goods originate from that geographic location. Examiners will consider a trademark to be “deceptively misdescriptive”, and therefore prohibited, if it consists of a geographic name and the associated goods do not emanate from that geographic location where Canadian consumers could be misled into thinking that the associated goods actually originated from that geographic location. A trademark will be considered to be a “geographic name” if it has no meaning other than as a geographic name, or if the ordinary Canadian consumer of the associated goods or services would view the primary or predominant meaning of the trademark as the geographic name, regardless of the fact that the name could have other meanings. See full Practice Notice. This new Practice Notice takes into account the decision of the Federal Court of Appeal in MC Imports Inc. v. AFOD Ltd., 2016 FCA 60, which is the subject of our earlier post here.

University of Calgary restricts access to BitTorrent

The University of Calgary has banned the use of BitTorrent by students on some of its WiFi networks. The University acts as an Internet Service Provider (ISP) for students, and as such is required to comply with Canada’s notice-and-notice regime under the Copyright Act. The regime requires ISPs to forward notices to customers from copyright holders who believe their copyrights have been infringed by those customers. The University stated that the ban was in part due to the large number of notices they were being required to forward to customers. Read more here.

Fixed Dosage Regimen does not Limit a Physician’s Skill and Judgment

In Canada, methods of medical treatment are not patentable subject matter. In contrast, medical use claims, such as the use of metformin to treat type 2 diabetes, are considered to be patentable subject matter. To articulate its position on the fine line between a medical use claim and a method of medical treatment claim, in 2015, the Canadian Intellectual Property Office (“CIPO”) issued practice notice PN 2015-01 entitled Revised Examination Practice Respecting Medical Uses. This practice notice focuses its analysis on whether the essence of an invention is directed at “what” to use to treat a patient, which is patentable, versus “how” to use something to treat a patient, which may be unpatentable if it prevents, interferes with, or requires a physician’s skill and judgment.

Recent Decision No. 1409 of the Patent Appeal Board (“PAB”) and the Commissioner of Patents provides further clarity as to the CIPO’s interpretation of PN 2015-01. This decision confirms that claims restricted to a fixed dosage regimen are patentable if they do not prevent, interfere with, or require a physician’s skill and judgment. Decision No. 1409 is concerned with one substantive issue: whether patent application No. 2,504,868, titled “Multiple-Variable Dose Regimen for Treating TNF-alpha-Related Disorders” (the “‘868 application”) claims subject matter that is patentable.

Claim 1 of the ‘868 application recites:

Use of D2E7 [a TNF-alpha inhibitor sold commercially as HUMIRATM] in multiple doses for treating inflammatory bowel disease [such as Crohn’s disease] in a human subject, wherein the multiple doses comprise:

a first dose of 160mg of D2E7 for subcutaneous administration;

a second dose of 80mg of D2E7 for subcutaneous administration two weeks following administration of the first dose; and

a third dose of 40mg of D2E7 for subcutaneous administration two weeks following administration of the second dose.

During patent prosecution, the claims were rejected on the basis that they encroached upon the physician’s right to determine how to treat a particular patient, and therefore amounted to a method of medical treatment. However, in Decision No. 1409, the PAB recognized that the examination of method of medical treatment claims had evolved over time. The PAB noted that PN 2015-01 rescinded the earlier Practice Notice PN 2013-04 on Examination Practice Respecting Medical Uses, particularly with respect to the patentability of dosage regimens. In contrast with PN 2013-04, PN 2015-01 provides that where an essential element of a claim instructs a medical professional “how” to treat a patient, the claim is not necessarily directed to a method of medical treatment. Rather, a further inquiry must be undertaken to determine if the essential element prevents, interferes with or requires the professional skill of a physician. Essential elements that narrow treatment to a fixed dosage, a fixed dosage regimen, a patient sub-population, or a particular administration site are not considered to be a limitation on the physician’s professional skill or judgment, according to PN 2015-01.

Applying this analysis and having regard to the application as a whole, the PAB concluded that claim 1 of the ‘868 patent was not ambiguous and claimed a fixed dosage regimen in terms of the route of administration, the dose of D2E7, and the timing between the doses. As such, claim 1 went beyond claiming a composition of matter, and served to “instruct a medical professional ‘how’ to treat a patient” (see para. 59).

The PAB then applied PN 2015-01 to consider whether claim 1 of the ’868 application prevents, interferes with, or requires the professional skill of a physician. First, to administer D2E7 according to a fixed dosage regimen does not require the professional skill of a physician. Second, the PAB concluded that claim 1 does not prevent or interfere with a physician’s skill or judgment, and that a physician’s determination that an alternative dosage regimen is appropriate for a patient falls outside the scope of ‘868 claims. Claim 1 is restricted to a “specific” dosage regimen and does not encroach upon the physician’s right to exercise his/her professional skill and judgment when determining which dosage regimen a patient needs and when adjusting dosage regimens over time.

This decision is favourable for patent applicants and provides greater clarity on how the CIPO will interpret patent claims incorporating fixed drug dosage regimes. To help expedite patent prosecution, a patent applicant/drafter may consider clear claim language indicating a fixed dosage or a fixed dosage regimen and a well-crafted specification suggesting that a physician’s professional skill and judgment is not required in respect of that particular fixed dosage regimen.

One potential caveat to keep in mind, however, is that in Decision No. 1409, the claims were directed to preferred or most preferred embodiments that were supported by the specific examples contained in the application (see para. 10). In cases where it is less clear from the application as filed that there is in fact a preferred dosage regime, it may be more difficult for applicants to argue that professional skill and judgment is not required to determine an appropriate dosage regime for a particular patient.

RBC Capital Markets Obtains Receives Canadian Patent for THOR Trading Technology

Royal Bank of Canada’s corporate and investment banking division, RBC Capital Markets, has been granted a Canadian patent for its THOR technology. THOR software normalizes the amount of time it takes for data to travel to a stock exchange, limiting the speed advantage of high frequency trading firms and thereby leveling the playing field for investors. See full article.

How Competition Law Intersects with Intellectual Property and What You Should Know

How Competition Law Intersects with Intellectual Property and What You Should Know

Competition law can at times conflict with the goals of intellectual property (IP) law. While competition law seeks to maintain market competition by regulating anti-competitive conduct, IP law grants exclusive rights to inventors and creators. In view of these inconsistent goals, IP rights (IPRs) do not function as a blank cheque to practice in any manner the IPR holder sees fit. For example, sections 45 and 90.1 of the Competition Act (RSC 1985, c C-34) regulate various IP issues, including licensing agreements, patent pools, assignments, distribution practices, and patent litigation settlement agreements. IPR holders should review how their actions may be affected by these provisions and competition law generally.

IP Guidelines

On 31 March 2016, the Competition Bureau released an updated version of the Intellectual Property Enforcement Guidelines (the “IPEGs”). Although non-binding, the IPEGs attempt to provide clarity on how the Bureau approaches IP-related matters under the Competition Act. Specifically, the IPEGs attempt to provide practical guidance on the Bureau’s approach to patent settlement agreements, product switching, patent assertion entities, and collaborative standard setting and standard essential patents.

“A Mere Exercise” of IPRs

The IPEGs state that the general provisions of the Competition Act will apply to anything more than a “mere exercise” of IPRs. What constitutes “a mere exercise” depends on the specific context. A relevant question is whether an IPR holder has used its statutory rights to increase the market power beyond whatever initially derived from the statutory rights. Interestingly, the IPEGs note that IPRs do not necessarily confer market power. For example, the existence of market power depends on the subject matter of a patent (or patents) owned by the entity in question, the level of concentration in the relevant market, and any horizontal effects a merger may cause on the market.

Section 32 of the Competition Act serves as an exception to the “mere exercise” rule. That is, where a mere exercise of IPRs actually “unduly” lessens competition, the Bureau may seek to preclude or reverse that conduct. The Bureau can seek a number of remedies under this section, including a declaration that a license, assignment, or other agreement is void; an order that a trademark registration be expunged or amended; an order to revoke a patent; or an order directing the grant of a license. The use of section 32 is rare, and there is no existing jurisprudence to guide how the Bureau might apply this section.  However, it is still important for IPR holders to be aware of its existence, given the potentially serious actions the Bureau is permitted to take.

Licensing Agreements

Licensing agreements are generally seen as pro-competitive, as they provide competitors with access to otherwise monopolized products. Unless the licensing agreement reduces competition substantially relative to what the situation would have been in the absence of the agreement, the Bureau will be unlikely to take any action. However, such agreements may attract scrutiny under section 45 or section 90.1 of the Competition Act if they resemble an attempt to control prices or otherwise restrict competition in a market.[1]

Patent Pools

A patent pool involves several companies assigning their patents to a third party and in return each receiving a license to use all of the “pooled” patents. Such conduct can allow companies to fix prices, increase royalties, or otherwise limit competition, thereby potentially falling within section 45 or 90.1 of the Competition Act. However, where a patent pool simply has the effect of avoiding litigation or is otherwise pro-competitive, it is unlikely that the Bureau will pursue action against such conduct.

Assignments

Where an assignment grants an assignee greater market power than the underlying IPRs would otherwise grant, section 45 or section 90.1 may come into play. It remains a fact-specific question as to whether or not the assignment amounts to a “mere exercise” of IPRs, or something more. Assignment agreements between direct competitors will likely attract more scrutiny than other assignments.

Patent Litigation Settlement Agreements

According to the IP Guidelines, patent litigation settlement agreements cannot be a “mere exercise” of IPRs because settlement agreements engage at least two parties. Therefore, patent settlement agreements attract the general provisions of the Competition Act.

The test for finding a substantial lessening or prevention of competition is the “but for” test – that is, but for the settlement, would the parties have been likely to compete in the relevant market? If so, it is open for the Bureau to find that there has been a negative effect on competition.

In the pharmaceutical realm, an innovative pharmaceutical company that allows a generic manufacturer to enter the market before the expiry of the innovator’s patent without other consideration will not likely attract attention from the Bureau. However, if the innovator provides additional consideration to the generic manufacturer in order to obtain the settlement, the Bureau may review the settlement, particularly where the additional consideration acts as compensation for delaying the generic manufacturer’s entry into the market.

To determine whether payment from an innovative drug company to a generic manufacturer under a settlement agreement likely had the effect of delaying the generic manufacturer’s entry into the market, the Bureau will consider the following factors:

  • the fair market value of any consideration provided by the generic manufacturer;
  • the extent of the innovator’s exposure to damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133); and
  • the innovator’s expected remaining litigation costs in the absence of a settlement agreement.

Under the IPEGs, a settlement will only be reviewed under the section 45 criminal provisions in rare circumstances, such as where the settlement is a “sham” or where the settlement precludes marketplace entry of a generic manufacturer until well after the expiry date of the patent in consideration. Another example is where a settlement is entered into even when parties realize that the patent is invalid or otherwise not infringed.

Distribution Practices

The Competition Tribunal has held that a refusal to license an IPR does not amount to “something more” than the mere exercise of that right, and therefore does not attract the section 75 “refusal to deal” provision of the Competition Act.[2] However, acquiring a large number of IPRs in a certain area and then refusing to license them, and therefore causing a substantial lessening or prevention of competition in a particular market, could draw the Bureau’s attention to other provisions of the Competition Act, including sections 45 and 90.1. Further, a refusal to license an IPR to a downstream customer or supplier might run afoul of the price maintenance provision of the Competition Act.[3]

Conclusion

In general, the mere exercise of IPRs will not offend provisions of the Competition Act. However, a transaction or other action that has a negative effect on competition in a market may prompt review by the Competition Bureau.

IPR holders involved in one or more of the transaction types discussed above should take steps now to evaluate what impact competition law may have on their business operations.

Endnotes

[1]  Section 45 of the Competition Act prohibits individuals and companies from conspiring with one another to lessen competition unduly or to enhance prices unreasonably. A purpose of this prohibition is to ensure that businesses and their customers both benefit from competitive prices, produce choice, and quality products and services. Where the Competition Tribunal has reason to believe that an individual or company is conducting affairs in a manner contrary to section 45 (or other provisions of the Competition Act), it will conduct an investigation. Investigations under the Competition Act can lead to significant financial penalties and criminal proceedings, including fines to a maximum of $10 million per incident and jail terms of up to five years. Under section 36 of the Competition Act, victims can seek compensation for losses incurred as a result of violations of the Competition Act, including section 45.

Section 90.1 regulates existing or proposed agreements between persons, two or more of whom are “competitors,” that prevent or lessen competition substantially (or are likely to do so). The factors to be considered by the Competition Tribunal in undertaking this assessment include effective remaining competition, barriers to entry, change and innovation, etc. An efficiencies defence applies if the agreement brings about “gains in efficiency that will be greater than, and will offset, the effects of any prevention or lessening of competition” and if the efficiency gains would not be attained if a prohibition order was issued. In contrast to section 45, available remedies under section 90.1 are purely injunctive in nature. No private actions for damages are available for breaches of section 90.1.

[2] Canada (Director of Investigation & Research) v Warner Music Canada Ltd., 78 CPR (3d) 321.

While there is no absolute obligation on any person to supply to, or buy a product from, another person, section 75 of the Competition Act may be triggered under certain circumstances where one person refuses to supply another person. For section 75 to apply, the following requirements must be met: (i) the business of the would-be-customer is shown to be substantially affected or inoperable as a result of not being able to obtain adequate supplies of a product on usual trade terms; (ii) the inability to obtain adequate supplies must result from a lack of competition among suppliers; (iii) the would-be-customer is willing and able to meet the supplier’s usual trade terms; (iv) the product is in ample supply; and (v) the refusal to supply has an adverse effect (or is likely to cause an adverse effect) on competition in a market.

[3] The price maintenance provision, section 76, of the Competition Act permits the Bureau or a person (with leave) to apply to the Competition Tribunal for an order prohibiting certain conduct that has an adverse effect on competition, including conduct that involves: (i) a person influencing upward or discouraging the reduction of a second person’s selling or advertised price; (ii) a person refusing to supply a second person or otherwise discriminating against that second person because of that second person’s low pricing policy; and (iii) a person conditioning their supply to a second person on that second person not supplying a third person because of the third person’s low pricing policy. Section 76 permits the Competition Tribunal to prohibit conduct contrary to section 76 or to require that a person supply another person. A violation of section 76 will not result in a criminal conviction, criminal sentence, financial penalty, or the exposure to private damages (unless another provision of the Competition Act is breached).

By Tyler C. Berg and Stephanie A. Melnychuk

get_sidebar();