Technology Leaders Unite to Protect Intellectual Property Rights

From servers and hard drives to semiconductors and software, Intellectual Property (IP) is a key asset for many high tech companies. Protecting the invention, innovation, research, design and testing involved in creating IP is critical to high tech companies of all sizes, and IP must be closely guarded to protect technological advancements. Threats to IP are many and varied, and come in many different forms -- including gray marketing, counterfeiting, service and warranty fraud and digital IP abuse.

AGMA, a non-profit organization and the largest group solely focused on IP protection in the high-tech industry, is on a mission to hinder threats to IP and render these activities more difficult, undesirable and unprofitable. AGMA's goal is to educate the industry and the public -- sharing and developing best practices in the fight against IP theft. Comprised of the tech sector's most influential companies -- including Avaya^®, Cisco^®, APC^® by Schneider Electric, HP^®, IBM^®, Microsoft^®, QLogic^®, Seagate^® and more -- AGMA employs a number of tactics, including event speaking, educational initiatives, benchmark studies, industry guidelines, and public policy advocacy.

Advocating for Change

IP theft comes in many shapes and sizes. AGMA has narrowed its focus on the following threats: gray market, counterfeiting, service and warranty fraud and digital IP abuse. These four distinct areas of focus must be closely guarded in order for the high-tech industry to thrive and contribute to economic prosperity, innovation and security. To provide a greater level of support to its members, AGMA has recently appointed industry experts to act as advocates for each of its four focus areas.

AGMA appointed advocates include individuals from prominent member companies including HP, Schneider Electric and Microsoft. A primary responsibility for AGMA Advocates is to drive internal and external initiatives that will bring greater visibility to the issue and arm members with best practices to address the problem. Leveraging their extensive knowledge, AGMA Advocates will also provide a greater level of education to the industry, law enforcement, policy makers and consumers.

According to AGMA president Sally Nguyen, "AGMA has been fighting the good fight against these threats to intellectual property rights since 2001, and we are still the only association that is focused on these issues facing the high-tech industry. Our AGMA Advocates dig deep into their specific areas of focus -- they provide additional resources and knowledge to penetrate the industry and raise awareness. The goal is for members to get the most out their AGMA membership and make them more adept at fighting the problem."

The Issues at a Glance

Gray marketing is the sale of genuine branded products that have been diverted from authorized distribution channels or that have been imported into another country without the consent and knowledge of the brand owner. Counterfeiting is the deliberate attempt to deceive consumers by copying and marketing goods that bear a rights holder's trademark, so that these goods appear to have been placed on the market by the rights holder. Both gray marketing and counterfeiting impact more than just the bottom line -- they can negatively influence brand image, customer loyalty and overall customer satisfaction.

Service and warranty fraud contributes to the gray market, and acts as a conduit for counterfeit goods to infiltrate the authorized supply chain. Finally, due to their intangible nature, digital products can be reproduced at a very low cost and delivered via the Internet across virtually unlimited geographic markets. Therefore, it's easy to see why digital IP represents the most rapidly growing portion of the global economy.

This article first appeared in http://www.digitaljournal.com/pr/2515104

Parallel import issues under Indian trademark law

Parallel importation is a complex and often disputed issue in the IP field. ‘Parallel imports’ are genuine goods that are legitimately acquired from the rights holder and subsequently sold at lower prices through unauthorised trade channels in the same or a different market.

As parallel importation is essentially a trade practice, it is regulated under both IP law and competition law. In the trademark law context, parallel importation significantly affects the rights of a manufacturer or trader, as trademarks help traders to earn goodwill in the market and to protect their commercial reputation. As territorial rights, trademarks also indicate the source of the trademarked products or services. A conflict therefore arises when parallel importation results in a misrepresentation of the source, reputation or quality of the trademarked goods.

There is no dispute that parallel importers are in business to make money. Parallel importation occurs due to price differentials caused by currency rate fluctuations and tax differentials in different markets. This allows goods to be resold at a profit by a third party in a more expensive market. Actions to prevent parallel imports under trademark law include suits for passing off and/or infringement.

Parallel imports are also referred to as ‘grey-market’ goods because although the goods may be genuine, they are sold through unauthorised trade channels. The Indian judiciary has recently attempted to clarify this ‘grey’ area.

Law on parallel imports

In India, parallel importation is intricately linked to the principle of exhaustion of rights under the Trademarks Act, 1999. The principle of exhaustion of rights is enshrined in Article 6 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), which states that “nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights”. Hence, each state is entitled either to prohibit or to allow parallel imports within its own legal framework.

Two major issues that are often discussed in the context of parallel importation and trademarks in India are whether parallel importation constitutes infringement under Section 29 of the Trademarks Act and whether India recognises the principle of international exhaustion of rights under Section 30 of the Trademarks Act.

Case law

One of the first cases concerning parallel importation and trademark law in India was Cisco Technologies v Shrikanth 2006 (31) PTC 538, in which the Delhi High Court granted an ex parte injunction in favour of the plaintiff and restrained the defendant from importing computer hardware and hardware components under the trademark CISCO (which was registered in India). The plaintiff argued that:

CISCO products such as routers and switches are mission and human critical hardware components used in network infrastructure; that the product of the Plaintiff is used in critical networks such as railways, air-traffic control, hospitals, air defenses etc.; that malfunctioning/failure of the product of the Plaintiff would result in huge losses due to failure of these networks; that keeping in view the critical importance of the product in question, it becomes imperative to ensure that neither counterfeit sales nor sales by misrepresentation take place… and that public interest has to be kept in mind while determining the issue whether ex-pare ad interim relief should flow to the Plaintiff at this stage.

In accepting the plaintiff’s arguments, the court also observed that:

It is the obligation of all statutory and governmental authorities to ensure that laws are not violated by any person in this country. For persons who hold benefit of registered trademarks, Section 140 of the Trade Mark Act, 1999 makes statutory provisions whereunder the Collector of Customs could prohibit the importation of goods if the import thereof would infringe Section 29(vi)(c) of the Trade Marks Act. I see no reason why the statutory authorities should not prohibit import of such products, import whereof would result or abet in the violation of the proprietary interest of a person in a trademark/trade name.

The court also issued directions to Customs to notify at all ports that no consignments, other than those of the plaintiff, should be permitted to be imported in respect of routers, switches or cards bearing the CISCO trademark and/or the bridge device.

The Indian courts will usually grant an injunction against parallel importers only if the nature or quality of the goods has been changed or impaired after they have been put on the market. For instance, in Samsung Electronics Co Ltd v Mr G Choudhary, 2006 (33) PTC 425, Samsung argued that the sale of parallel-imported ink cartridges and toners did not strictly conform to Indian laws and regulations (eg, they were not accompanied by literature in English or the vernacular, and/or a label indicating the maximum retail price; they were not covered by a warranty; and use of the products would likely breach the warranty of the printer in which they were used). The Delhi High Court restrained the defendant from dealing directly or indirectly in those products.

In M/S General Electric Company v Altamas Khan General Electric argued, among other things, that the defendants’ import of its genuine products into a territory for which they were not intended violated its trademark and caused it loss. It further argued that the illegal sale caused it loss of reputation, insofar as purchasers that were unable to claim warranty or avail of an aftercare service would likely blame it or hold it responsible. The Delhi High Court found the defendants liable for infringement.

In Kapil Wadhva v Samsung Electronics, 2013 (53) PTC112, the Delhi High Court Division Bench reinforced the legality of parallel imports and held that the Trademarks Act enshrines the principle of international exhaustion of rights. In other words, it held that the exclusive right of a trademark owner over its goods is exhausted once the goods have been put on the market either by the trademark owner or with its consent. The court held, among other things, that the word ‘market’ used in the statute implies a global market, and that the preparatory works to the Trademark Bill 1999 clearly indicate the intent of the legislature to recognise the principle of international exhaustion of rights to control further sales of the goods once they have been put on the market by the trademark owner.

To illustrate: where a third party acquires goods legitimately from the trademark owner in country X, which follows the principle of international exhaustion of rights, and subsequently sells them at a higher or lower price in country Y, which also has an international regime, the trademark owner cannot oppose the sale because its exclusive right has already been exhausted by the doctrine of exhaustion in country X. An international exhaustion regime is therefore consistent with TRIPs in promoting free trade.

Section 30(4) of the Trademarks Act allows the trademark owner to control the circulation of goods where there are legitimate reasons to object to further dealings in the goods – in particular, where their condition is changed or impaired after they have been put on the market. The Delhi High Court Division Bench has broadly interpreted ‘legitimate reasons’ to include differences in:

• services and warranties;
• advertising and promotional efforts;
• packaging;
• quality control, pricing and presentation; and
• the language of the product literature.

Although an appeal is pending before the Supreme Court of India, the decision remains in force.

A notable aspect of this ruling is that the court directed that, as far as possible, unauthorised dealers and parallel importers must prominently display in their showrooms signs stating that the products they sell have been imported, and that they themselves – rather than the trademark owners – are providing the related warranty and aftercare services. The appellant in this case was ordered to display the following sign outside its showroom: “Samsung/SAMSUNG Products sold are imported into India and SAMSUNG (KOREA) does not warranty the quality of the goods nor provide any after sales service for the goods. We warranty the quality of the goods and shall provide after sales service for the goods.”

Such practices can mitigate the risk of confusion and deception among consumers and help consumers to identify the source of the products and distinguish between parallel imports and authorised products.

In India, the only circumstances in which a trademark owner can oppose or prohibit unauthorised parallel imports and plead infringement under the Trademarks Act are where the goods either were not lawfully acquired or were changed or materially altered after their acquisition. Therefore, given the international exhaustion of rights regime, a parallel importer need not prove that the trademark owner has consented to the parallel imports, either expressly or implicitly. Perhaps the only burden on the parallel importer relates to the quality and safety compliance of the products. In Philip Morris Products SA v Sameer, 209 (2014) DLT 1, the Delhi High Court held that in light of the legal position enunciated by the Division Bench in Samsung, an importer of grey-market goods, its representative or a subsequent purchaser will not be liable for infringement under Section 29 if the imports fall within the purview of Section 30(3). However, the importer must prove that the impugned goods were placed on a market worldwide by the trademark owner or with its consent, and thereafter that it lawfully acquired them.

Customs law

Indian customs law also includes provisions on parallel importation. According to the 2012 Central Board of Excise & Customs Circular on Enforcement of Intellectual Property Rights on Imported Goods, parallel importation is not prohibited unless:

• the goods bear a false trademark as specified in Section 102 of the Trademarks Act; or
• the goods bear a false trade description within the meaning of Section 2(1)(i), in relation to any of the matters connected to the description, statement or other indications of the product, excluding those specified in Sections 2(1)(ii) and (iii).

This marked a clear departure from the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007, which provided that where a trademark owner notified the customs authorities in the prescribed format requesting that clearance of goods suspected of infringing its rights be suspended, and this notice was duly registered by the customs authorities, the import of all goods bearing the infringing trademark would be suspended and proceedings for confiscation of the goods would be initiated under Section 111(d) of the Customs Act. The confiscated goods were eventually required to be destroyed or disposed of outside normal channels of commerce with the trademark owner’s consent.

Consequences of parallel importation

Parallel importation has both legal and economic ramifications. Economically, it promotes the availability of trademarked goods at different prices, which prevents the establishment of a trade monopoly. A monopolistic approach in a parallel import-free market would lead to inflated prices of the goods sold by the trademark owner or authorised dealer. In the absence of cheaper alternatives, consumers would be obliged to purchase goods at the price set by the monopolist. This could have an adverse effect on the overall market, as well as on supply and demand.

Legally, it is essential to prevent deception and confusion among consumers regarding the source or quality of products, and to protect the economic interests of trademark owners. Only if the parallel imported products are materially different from those sold directly can a trademark owner file suit, including for passing off, falsification and infringement.

Therefore, the positive impact of parallel importation is that it forces prices down and provides consumers with goods at lower prices. Parallel imports prevent trademark owners from exercising their exclusive right to divide markets and thus promote free trade, subject to the exhaustion doctrine followed in the particular country. The negative impact is that the manufacturer’s distribution arrangements and ability to monitor the quality of trademarked goods are restricted. Parallel imports are also often used as a tool to cash in on the reputation and goodwill of the trademark owner; this can give rise to an action for passing off.

While consumers may benefit from lower prices for trademarked goods, parallel imports do not necessarily guarantee quality assurance or an aftercare service, and may thus result in consumer dissatisfaction and cause damage to the reputation and goodwill of the trademark. On a more practical note, however, the consumer as end user has the ultimate choice and is the ultimate beneficiary of parallel trade. Most consumers would purchase an Apple or Sony product from authorised dealers only and would be aware of the repercussions if they did otherwise. Similarly, in the case of pharmaceuticals, consumers would generally exercise extra caution and purchase the same from trusted distributors, chemists or hospitals.

Conclusion

Under Indian trademark law, trademark owners can take legal action only against traders dealing in goods that compromise the goodwill, reputation or quality of the trademark. Parallel importation thus acts as a reasonable limitation to the trademark owner’s exclusive rights to use the mark in relation to the goods and services for which it has been registered.

The decision on whether to allow parallel importation is ultimately a choice between quality control and price control; between the economic rights of trademark owners and consumer access; between trade monopolies and free trade. In the trademark context, parallel importation in no way compromises the trademark owner’s right to sue for infringement, passing off or falsification of its marks. In this sense, by following the principle of international exhaustion of rights, Indian law not only safeguards the reputational assets of a trademark, but also ensures free trade, as mandated by TRIPs, by eliminating the monopolistic tendencies of profit-driven trademark owners.

This article first appeared in IAM magazine. For further information please visit www.iam-magazine.com

Trademark Law

The year 2014 will be remembered as the year when Canada rewrote its trademark laws. Much has been written on this subject and much more will be written over the next few years. However, 2014 was also an exceptionally busy year for trademark cases in Canada. While no single case stood out above the rest, there were a number of interesting cases of which both legal professionals and brand owners should take note.

When is a trademark clearly descriptive of geographic origin?

In Lum v Dr Coby Cragg Inc the Federal Court considered whether the registered mark OCEAN PARK for use with “dental clinics” was clearly descriptive of place of origin, as the dental clinic in question was located in an area called Ocean Park. The court applied a two-part test that:

• the mark must point to a place; and
• the place must be indigenous to the services in question.

The plaintiff failed on the second part of the test as Ocean Park was not indigenous to dental services. There was no evidence that a reasonable person hearing the term 'Ocean Park' would automatically think of going to the dentist, and as a result the registration was maintained.

In MC Imports Ltd v Afod Ltd the Federal Court considered whether the registered mark LINGAYEN, covering a variety of Filipino foods – including bagoong, a fish sauce – was clearly descriptive of the place of origin of these products. The evidence showed that Lingayen was a municipality in the Philippines and a known source of bagoong. Further, the registrant’s goods originated from Lingayen. As such, the court deemed the mark to be clearly descriptive of the place of origin and the registration was ordered to be expunged.

The Federal Court also considered the issue from the perspective of the ordinary consumer and concluded that he or she would not be without knowledge, and would have some intelligence and concern about the item being purchased. The ordinary consumer in this case would essentially be Canadians of Filipino or Southeast Asian origin, a group among which LINGAYEN would be viewed as clearly descriptive of origin.  

Both of these decisions have been appealed, providing the Federal Court of Appeal an opportunity to clarify the test to be applied in determining if a mark is objectionable on the basis that it is clearly descriptive of place of origin.

Distinctiveness of geographical designation not linked to absence of deception

London Drugs Limited v International Clothiers Inc concerned London Drugs, a well-known Canadian drugstore chain which owns various trademark registrations incorporating the term 'London'. It appealed a decision of the Opposition Board that allowed applications for the trademark SMITH & BARNES LONDON, covering a variety of retail store services and related wares.

In assessing confusion, the Federal Court rejected the argument that a trademark incorporating a geographical term may be distinctive where it is used on wares or services that have no pre-existing connection to the designation. It noted that the distinctiveness of a mark has to do with its originality, uniqueness and inventiveness, not with the absence of deception. Geographical designations such as 'London' are not inherently distinctive, and should not be accorded a high degree of protection unless they have acquired distinctiveness over time. The court upheld the board’s decision and rejected the appeal.

Assessing confusion between inherently weak letter marks

In Gemological Institute of America v Gemology Headquarters International an application for the mark GHI was opposed by the Gemological Institute of America on the basis of confusion with its registered trademark, GIA. Both marks covered goods and services in the field of gemology. The Opposition Board noted the inherent weakness of marks consisting of letter acronyms and rejected the opposition. On appeal to the Federal Court, fresh evidence was filed to show that while not inherently distinctive, the opponent’s GIA mark had been used over a significant period of time and was well known in Canada. The court noted that if this new evidence had been put before the board, it would have approached the confusion analysis differently and would have considered that the opponent’s mark was well known. The appeal was allowed, and the application to register GHI was refused. The court’s decision has been appealed.

Consideration of nature of wares and channels of trade

In Hayabusa Fightwear Inc v Suzuki Motor Corporation the applicant, a company specialising in mixed martial arts, appealed the board’s decision to refuse its application to register HAYABUSA for use with clothing. Suzuki opposed the application based on its registration for the identical mark HAYABUSA for motorcycles and on its prior use of HAYABUSA with motorcycles and caps.

The court found that the board had failed to consider the different channels of trade for the parties’ products. As Suzuki did not hold a registration covering “caps”, it was imperative to consider its actual use with these goods, which involved sales strictly through authorised Suzuki dealers (ie, a single channel of trade and to targeted consumers). The fact that it would be virtually impossible to find the parties’ wares in the same channels of trade should have been determinative of the matter in favour of Hayabusa Fightwear. The court set aside the decision of the board and allowed the application.

Similarly, in Bridgestone Corporation v Campagnolo SRL the nature of the wares and channels of trade were key considerations. Campagnolo, a manufacturer of track and competitive road racing bicycle parts and accessories, applied to register the trademark POTENZA for bicycle parts and accessories, but not including tyres, brakes, wheels, rims and spokes. Bridgestone – primarily known for its automotive products – opposed based on its registration of the identical mark POTENZA in association with tyres, tubes and wheels. The board held that there was no reasonable likelihood of confusion, and on appeal the court agreed.

Bridgestone argued that it was erroneous to consider only current channels of trade – just because Campagnolo sold high-end bicycle components in specialty stores did not mean that it would not market a cheaper line in big-box stores in the future. The court disagreed, noting that the parties’ respective statements of wares must be read with a view to determining the probable channels of trade as opposed to the possible channels of trade.

Always confirm that the other side is still active

In Bacardi & Co Ltd v The Devil’s Martini Inc an application for the trademark DEVIL’S MARTINI was unsuccessfully opposed by Bacardi, which appealed to the Federal Court. During the appeal, it became apparent that the applicant had been dissolved. After confirming that the Office of the Public Guardian and Trustee in Ontario did not intend to continue with the application and that the director appointed under the Ontario Business Corportations Act did not intend to oppose the appeal, the court held that the mark was not registrable under Section 30 of the act and ordered that the application be refused. 

Issue raised for first time on appeal refused

In Cohen v Susan Fiedler Incorporated Cohen’s application for the 'F CANCER and design' mark was successfully opposed by Fiedler on the basis of Fiedler’s prior use of a series of unregistered F CANCER marks. On appeal, Cohen raised an entirely new argument – that the word 'f***' was obscene and therefore prohibited by Section 9(1)(j) of the act. The court noted that the argument was “somewhat counter-intuitive” given that it would be fatal to Cohen’s own application, but Cohen conceded that her goal was not the registration of her own mark, but rather the collateral purpose of obtaining a ruling from the court that Fiedler had no enforceable common law rights to its F CANCER marks.

The court held that the question should have been decided by the Opposition Board, the expert tribunal with the authority to decide such questions, and that there was no valid reason why the argument could not have been raised before the board. The appeal was refused and the court went on to assess elevated costs, given that the appeal had been brought for collateral purposes.

Strict interpretation of 'use in Canada' not applicable in Section 45 proceedings

In Ridout v HJ Heinz Company Australia Ltd, a non-use cancellation proceeding, the registrar of trademarks maintained the registered mark OX & PALM for use with meat and processed meat. The evidence before the registrar showed that the registrant had received a purchase order for the wares and the goods were delivered to a shipper in Australia before expiry of the material period, but that they were subsequently delivered to the Canadian customer three days after the expiration of the material period. The registrar maintained the registration, noting that the mark was not “deadwood” and that this case did not warrant a strict interpretation of 'use'. The Federal Court upheld the decision, concluding that there was a transfer of property in the goods in Canada when they were delivered to the shipping entity in Australia, so long as the delivery to Canada was ultimately completed.

Thymes decision distinguished

The Reitmans (Canada) Ltd v Thymes Ltd decision confirmed that an application claiming use and registration in another jurisdiction must have all of the requisite elements present (use and the foreign registration, or at least a pending application) as of the Canadian filing date. If not, the application could be successfully opposed. Coors Brewing Company v Anheuser-Busch, LLC established that an allegation of an improper foreign registration and use claim in a registered mark did not constitute a ground for expungement. A lack of foreign use at the Canadian filing date is not fatal to registered trademarks that are issued based on a claim of foreign use and registration, provided that the claim was true at the time that it was made.

In August 2010 Anheuser filed a US application to register GRAB SOME BUDS based on intended use in the United States. A corresponding Canadian application was filed in mid-September 2010 based on proposed use in Canada. Use commenced in the United States in late September 2010 and the US case issued to registration in March 2011. In February 2011 Anheuser amended its Canadian application to rely on foreign (US) use and registration. The Canadian application proceeded to registration on this basis.  

Coors applied to expunge Anheuser’s Canadian registration, arguing that it was invalid since use of the mark did not commence in the United States until after the Canadian filing date. The court disagreed and upheld the registration. The sole basis for invalidating the registration raised by Coors was the alleged improper foreign registration and use claim. However, the grounds on which a registration may be expunged are set forth in Section 18 of the Trademarks Act, and the court confirmed that non-compliance with procedural filing requirements under Section 30 of the act does not constitute grounds for expungement. Further, while a misstatement in an application may present a ground for expungement, the statement made by Anheuser in its application was true when it was made, and as such it did not constitute a misstatement.

Section 9 objection at examination overturned by Federal Court

In Jack Black LLC v Canada (Attorney General) the applicant applied to register JACK BLACK for skincare products. The examiner objected to the registrability of the mark on the basis that Jack Black is a “famous living individual”. On appeal, the Federal Court concluded that the print-outs from the Internet relied on by the examiner in reaching his decision were insufficient to establish that there was an individual named Jack Black with a significant public reputation across Canada. The applicant also filed new evidence showing that the skincare products offered under its mark were not new, and in fact benefited from a fairly large circulation, without objection from Black.

Federal Court considers official marks

In Terrace (City) v Urban Distilleries Inc, which concerned the official mark SPIRIT BEAR, the failure to show prior adoption and use resulted in a declaration that the official mark was unenforceable. The court noted that adoption “is a low bar; all a party must do is state it has adopted the mark”. Use requires that the mark be made available for public display before publication. The court noted that “such use cannot be abstract. It must be associated with a particular ware or service, and a connection must be made with the wares or service and the mark”.

In surveying the relevant case law, the court noted that public display can include the display of a mark on a website in association with a particular service; use can be found when an announcement for the services and a logo, containing the mark and a graphical depiction of the mark, have been published in a public newsletter. A mark is not used where it is not distinguished from surrounding text, nor when it is used on internal communications only. 

The evidence fell short of establishing use, with the result that the SPIRIT BEAR official mark was deemed unenforceable. The court’s decision has been appealed.

In TCC Holdings Inc v Families as Support Teams Society the court considered whether a registered charity qualified as a public authority for the purposes of Section 9 of the act. The respondent, the Families as Support Teams Society, was a registered charity when it obtained the protection of Section 9, but its charity status was revoked shortly thereafter. It did not participate in the proceedings.

The court was satisfied that the respondent was not a public authority, noting that it did not meet the test of significant governmental control. As such, the court did not have to consider whether its activities satisfied the public benefit requirement. The court further noted that even if it had been a public authority, it ceased to be one when its charitable status was revoked, such that it was not entitled to benefit from the official mark.

Punitive and aggravated damages distinguished

In Bauer Hockey Corp v Sport Maska Inc, on a motion dealing with the sufficiency of pleadings, the Federal Court of Appeal commented on the distinction between punitive and aggravated damages. The court noted the following:

• Punitive damages are intended to punish the defendant in situations where the defendant’s misconduct is so malicious, oppressive and high handed that it offends the court’s sense of decency. They are not limited to situations of litigation misconduct.
• Aggravated damages are intended to compensate the plaintiff and are usually awarded in relation to intangible injuries (humiliation or mental distress), and it is questionable whether such damages can be claimed by a corporation.

The court struck Bauer’s claim to aggravated damages, but allowed the claim for punitive damages to remain in the statement of claim. While allegations of wilful and knowing infringement alone do not support a claim to punitive damages, the court held that it was not plain and obvious that the statement of claim disclosed no reasonable cause of action with respect to punitive damages, as there were other allegations to be considered.

Criminal penalties stemming from sale of counterfeit goods

In R v Strowbridge the accused was seen selling counterfeit brand-name products from the back of a van parked next to the highway, and C$500-worth of products were seized. He pled guilty to fraud and copyright and trademark infringement, and was sentenced to 15 months in prison – six of which were for copyright infringement under the Copyright Act and trademark infringement under the Criminal Code.

On appeal, the Newfoundland Court of Appeal canvassed sentencing decisions relating to the sale of counterfeit goods, primarily under the Copyright Act, most of which resulted in conditional sentences. The court distinguished between operations where customers buy goods from an ostensibly legitimate storefront operation versus the purchase of goods from the back of a van parked on the side of a highway, noting that while purchasers of counterfeit goods can be victims, there was no indication that they were in this case. The court deemed Strowbridge’s operation to be marginal and unsophisticated. 

The court agreed that a six-month sentence was disproportionately long and reduced it to two. This decision is of particular interest given the recent amendments to the Trademarks Act, which provide for significant criminal penalties in relation to counterfeiting activities.

Source: http://www.iam-media.com/reports/detail.aspx?g=3a07dca3-381e-4054-b2be-d0209a329ad4 

Delhi High court grants interim injunction; restrains Glenmark from selling generic version of anti-diabetic drug Januvia (Sitagliptin)

On April 2013, Glenmark launched the generic version of Merck’s popular antidiabetic drug Januvia (Sitagliptin) and Janumet (combination of sitagliptin and Metformin). Subsequently Merck filed a suit against Glenmark seeking interim relief. The Delhi HC (Justice Rajiv Sahai Endlaw) denied interim relief to Merck. After denial of interim relief, Merck was also briefly engaged in mediation with Glenmark over the Januvia patent. Readers may recall that we had blogged about it here here and here. Aggrieved by the denial of interim relief Merck also filed an appeal, seeking injunction.The Delhi High court division bench granted the interim injunction. This post aims to analyze the interim injunction order. IN209816 (product patent claiming Sitagliptin) is the subject of the present suit.(Long post warning*)

Merck’s arguments:

Merck contended that Sitagliptin Phosphate Monohydrate cannot be prepared without manufacturing the active ingredient, the Sitagliptin molecule. Merck also alleged that Glenmark willfully infringed the suit patent.

Glenmark’s arguments

Glenmark alleges that the patent is invalid under Section 64(1) of the Indian patents act:

The patent is lacks inventive step over prior art, patent. Glenmark further alleged that the suit patent is a “cut and paste job” from these two patents, specifically European Patent 1406622 and WO2001034594 A1.

The complete specification of the patent does not sufficiently and fairly describe the invention and the method by which it is to be performed, since the patent does not describe the preparation of the Sitagliptin free base or Sitagliptin phosphate monohydrate, but only its hydrochloride salt

Strangely enough, Glenmark also contended that the suit patent is not useful and lacksindustrial applicability because Sitagliptin free base is itself unstable. Glenmark also stated that the Sitagliptin phosphate monohydrate was the molecule used in the clinical trial, and not Sitagliptin Free Base.

The claim goes much beyond the limited disclosures in the specification, and thus the claim is over-broad or an impermissible Markush claim that creates a false monopoly.

Glenmark alleges that Merck did not comply with its obligation under Section 8 of the act to disclose patent applications made for the “same or substantially the same invention”. It was alleged that Merck did not disclose 5948/DELNP/2005 (for Sitagliptin Phosphate Monohydrate), 1130/DELNP/2006 (Sitagliptin Phosphate Anhydrate), 2710/DELNP/2008 (Sitagliptin plus Metformin) or subsequent international applications for these compounds either.

I wonder; where does one draw the line for Section 8 disclosure? What amounts to “disclosure of same or substantially same inventions” is a grey area! In my opinion 5948/DELNP/2005, 2710/DELNP/2008,1130/DELNP/2006 and their foreign equivalents are subject matters of separate patents and are not divisionals and do not claim priority from the original product patent IN209816.If section 8 requires one to disclose all related applications in the relevant arena – this is a separate patent landscape project in itself.

Curiously, Glenmark also argues that Sitagliptin phosphate monohydrate is qualitatively different from the Sitagliptin free base – it has enhanced pharmaceutical qualities (the reverse Section 3(d) argument so to speak!).This, according to Glenmark, means that the manufacture of Sitagliptin phosphate monohydrate does not violate a patent for the Sitagliptin free base simpliciter.

Courts observations:

In an exceedingly well reasoned judgement the Division bench (Justice Ravindra Bhat and Justice Najwi Wazir) of the Delhi High court made the following observations:

Regarding prior art the court notes that irrespective of whether the two patents are similar or not, EP 1406622 was published on after the priority date for the suit patent, and therefore does not qualify as prior art.

Regarding sufficiency of disclosure in the complete specification, the court observed that the patent sufficiently discloses the Sitagliptin free base, which in itself is clear, precise. The question whether the suit patent sufficiently discloses Sitagliptin phosphate monohydrate was left open.

Regarding industrial applicability, the court rightly observed that while the patent claims disclose the Sitagliptin free base, the description relating to the issue of industrial applicability recognizes that the Sitagliptin free base will be attached to some carrier (salt form). That carrier, however, is NOT the crux of the invention but only an inert component that does not add value to the therapeutic or medical value, which is the true core of the invention. It would be a far cry to hold that Sitagliptin is useless for any known purpose. The Court also noted that Sitagliptin was not known before, and its introduction allows for the inhibition of the DPP IV enzyme in such a manner as previously unknown, whether through one inert carrier or another.

Regarding Markush claims, , for the limited issue in these interim hearings the Court notes that the Markush formula and all combinations “share a common use or property” and “ share common structure factors relevant to determine the validity of a Markush patent, as per the Draft Guidelines of Indian patent office. The court opined that whilst it may be appealing at first blush to limit a pharmaceutical patent only to the exact and precise compounds and chemical structures disclosed, that may render genuine medical inventions to naught.

Regarding Section 8 (foreign filing disclosures) the court observed that Merck in the modified Form 3, disclosed foreign filings for patent related to combinations of Sitagliptin and metformin. The Court further stated that Section 8 only mandates the disclosure of patent applications outside India and not within. This is clear from the wording of Section 8 itself.

Conclusion:

The court also frowned upon Glenmark’s at risk launch and observed that the fact that Glenmark did not utilize the opposition mechanisms weighed in favour of grant of interim injunction.

The court carefully and meticulously evaluated the three factors involved in grant of interim injunctions.

Prima facie case: The court succinctly captured the crux of the case and noted that Merck had established a strong prima facie case on the merits of the suit claim. It is established that Glenmark uses Sitagliptin free base as the active component in its chemical formulation. The court was totally unimpressed with the unsubstantiated argument advanced by Glenmark that their generic version uses Sitagliptin Phosphate monohydrate, which is manufactured directly without using the Sitagliptin free base. The court further stated that the fact that Merck unsuccessfully pursued a separate patent for Sitagliptin Phosphate is irrelevant .Thus; prima facie infringement of Merck’s patent is established, in the opinion of this Court.

Irreparable injury: Whether the claimant would suffer irreparable injury in the absence of interim injunction?- It may be argued that no injunction should be granted since all damages from loss of sales can be compensated monetarily ultimately. For this argument – the court countered that, prices may not recover after the patentee ultimately prevails, even if it is able to survive the financial setback (or “hit”) during the interim, which may take some time. The victory for the patentee therefore should not be pyrrhic but real.

Balance of convenience: The court must look at the public interest in granting an injunction, as access to drugs, is an important factor especially in case of a condition as prevalent as diabetes. Here, the price difference between the commercial products sold by Glenmark and MSD is not so startling as to compel the court to infer that allowing Glenmark to sell the drug, at lower prices would result in increased access. The court observed In the Hoffman la Roche case the price differential was about 300% and therefore in that case, held that balance of convenience did not lie in favour of grant of injunction as the possibility of several thousand being denied access to the generic drug was real.

Delhi High Court Order:

http://lobis.nic.in/dhc/SRB/judgement/20-03-2015/SRB20032015FAOOS1902013.pdf  

http://spicyip.com/2015/03/delhi-high-court-grants-interim-injunction-restrains-glenmark-from-selling-generic-version-of-anti-diabetic-drug-januvia-sitagliptin.html

Administrative Trademark Decisions May Preclude Infringement Litigation

The U.S. Supreme Court ruled on March 24, 2015, that Trial Trademark and Appeal Board (“TTAB”) decisions “can be weighty enough” to preclude a district court from litigating the likelihood of confusion between trademarks in a subsequent infringement suit. The decision in B&B Hardware, Inc. v Hargis Industries, Inc. may not settle the nearly 20-year dispute between the owners of the SEALTIGHT and SEALTITE marks; however, the ruling is likely to increase the importance of TTAB proceedings. In certain circumstances, federal district courts may be bound by TTAB determinations that trademarks are confusingly similar under the doctrine of issue preclusion. Issue preclusion prevents the same issues from being litigated more than once, saving time and resources. 

As the Court explained, “[t]he full story [of the parties’ dispute] could fill a long, unhappy book.”  By 2003, the year B&B filed its opposition with the TTAB to stop Hargis from obtaining a federal trademark registration for a SEALTITE mark, the parties had been litigating trademark infringement claims for eight years.  B&B, the owner of a federal registration for SEALTIGHT for metal fasteners used in the aerospace industry, asserted that Hargis’ SEALTITE mark for fasteners used in building construction created a likelihood of confusion.

B&B won the TTAB opposition proceeding, and Hargis was denied federal registration of the SEALTITE mark. The TTAB determined that the SEALTITE mark was likely to cause confusion with the prior-registered SEALTIGHT mark. The TTAB made the determination based on a multi-factor likelihood of confusion analysis that examines the similarity of the marks, the goods, the customers and the trade channels, among other considerations.  

In this case, the TTAB only decided the narrow issue of the right to own a federal trademark registration. In contrast to a federal court, the TTAB cannot order a party to stop using a mark.  Following its loss at the TTAB, Hargis continued use of its SEALTITE mark. In subsequent infringement proceedings, B&B argued that the TTAB’s finding of a likelihood of confusion between the parties’ marks should stand, and that Hargis should not be able to re-litigate the issue. Both the district court and the Eighth Circuit rejected B&B’s argument and found that issue preclusion did not apply.

The Supreme Court reversed the Eighth Circuit and held that “[s]o long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.” The Court gave several reasons for this decision, including its observation that “the same likelihood-of-confusion standard applies to both registration and infringement.”

The case is now remanded to the lower court to determine if issue preclusion should apply on these specific facts, and thus the fight over the SEALTIGHT and SEALTITEmarks is likely to continue. The Court also explained that “for a great many registration decisions [from the TTAB] issue preclusion obviously will not apply because the ordinary elements will not be met.”

For example, the Court recognized the ordinary elements will not be met when the owner of a mark uses its mark in ways that are materially different from the trademark uses disclosed in a trademark application for registration. The TTAB decision will not have a preclusive effect “if the TTAB does not consider the marketplace usage of the parties’ marks[.]”

The impact of B&B Hardware on brand owners may be minimal. TTAB proceedings are routinely suspended for federal litigation involving the same parties and the same marks; however, parties that participate in a  TTAB case will need to carefully evaluate the potential for issue preclusion in a subsequent action. Indeed, as the Court explained, “[w]hen registration is opposed, there is a good reason to think that both sides will take the matter seriously.”

For trademark owners that disagree with a TTAB decision, they can pursue a de novo review of the TTAB decision before either the Federal Circuit or a U.S. District Court. Otherwise, there is a possibility that issue preclusion may impact subsequent infringement litigation involving the same marks.

http://www.natlawreview.com/article/administrative-trademark-decisions-may-preclude-infringement-litigation

Trademark and Copyright Law

Because of the value of even the simplest phrase, celebrities today are utilizing copyright and trademark law to protect their intellectual rights in instances rarely before noticed. It is Copyright and Trademark Law which requires their lawyers to send cease and desist letters to unsuspecting entrepreneurs. A balance needs to be restored so celebrities can proceed against large scale pirates even if they don’t aggressively seek to protect their intellectual property rights in every case.

Recently Publicized Trademark and Copyright Actions by Attorneys for Celebrities

Individuals and small businesses have recently been surprised to receive cease and desist letters from entertainers like Taylor Swift and Katy Perry for everything from TaylorSwift song lyrics on a coffee cup to a 3D print of the left shark in Katy Perry’s Super Bowl performance. So what’s up with that?

It’s been said that entertainers are now blurring the lines between copyright, trademark and patent law simply to make more money or to prevent others from making money off of them. However, there actually is precedent for making claims that a musician’s lyrics are protected under trademark law and that other images created by a performer and likewise associated with that entertainer are protected under copyright law.

Trademark Law

The cease and desist letter sent by Taylor Swift’s attorneys to prevent her lyrics from being printed on coffee cups sold to the public is an example of how entertainers today are seeking to protect their work from being infringed by others under trademark law.

It would be difficult today for any lyricist or musician to claim that they discovered, invented or created the grouping of any few words in a song title or the song’s lyrics for the very first time and that no one ever before them had come along to do so. Although at some point, someone must have said each phrase in any language for the very first time, it’s doubtful they ever became so well known for having used the phrase that others would immediately associate the phrase with that person.

Today, while the lyrics of a songwriter would be a valid work that could be copyrighted so as to entitle the musician to bring suit for copyright infringement against anyone using them in a copyrightable work themselves, with the exception of the fair use doctrine (which is an entire subject on its own) for slight uses, the average person on the street would not expect that the lyrics could be trademarked so as to prevent the use of even a one-line lyric on a coffee cup. But they can. They can be trademarked as well as copyrighted. So what is going on here?

The theory behind an assertion that lyrics or a slogan, or a phrase can be trademarked is that the lyrics have become so distinctly associated with the entertainer themself or their song in the case of lyrics, that they have acquired secondary meaning, thus allowing the performer the right to protect the phrase in any type of commerce, such as on coffee cups or other goods.

Is it really worth it to trademark a phrase that you’re associated with? Consider the trademarked phrase, “Let’s Get Ready to Rumble.” It’s been reported that this one simple phrase has generated $400 million to it’s owner, Michael Buffer.

Is such a legal assertion going to hold water for the local street performer or even an emerging artist on a singing competition on television. In nearly every instance, the answer would be no. But for someone of Taylor Swift’s stature, or Katy Perry’s or the Beatles? Yes.

But why should it be necessary for such artists who are most assuredly making more money than we can imagine need to prevent a small entrepreneur from making a small amount of money from coffee cups with a songwriter’s lyrics on them? Because trademark law in the U.S. requires them to do just that if they want to protect their works.

Trademark law require a quick response from the owner of a work in which they assert ownership to prevent the unauthorized use of their work. This is normally achieved by use of a “cease and desist” letter to the alleged infringer of their work. It’s not a lawsuit, but it’s a none-too-polite way of warning the alleged infringer that if they don’t stop using the person’s work in commerce, a lawsuit will follow, which can be far more expensive to defend in most cases, with the risk of a judgement for damages, than stopping what it is they’re doing that has brought the ire of the work’s owner, in this case the lyricist or performer.

The typical cease and desist letter, whether it’s used to stop an alleged trademark infringement or an alleged copyright infringement, warns the alleged infringer that their continued use or sale of the alleged infringing products may subject them to a judgement for actual damages, statutory damages, and punitive damages as well as immediate and permanent injunctive relief if they are found to have infringed the owner’s copyright or trademark. What such a letter also fails to mention, is that the attorney fees and costs in defending such a lawsuit may be so expensive as to even force them into bankruptcy.

Even if the claim that’s made by the attorneys for the artist in a cease and desist letter is bogus, specious at best, in most cases it simply isn’t worth it for the individual or a small business to wage the fight against a deep-pocketed performer just to win a small victory that obtains only the right to sell an item rather than the damages the performer could win for the infringement of their work.

Copyright Law

The cease and desist letter sent by Katy Perry’s lawyers to the owner of an online store selling 3D printed replicas of the left shark in Katy Perry’s Super Bowl performance was based on an assertion by her lawyers that the sale of 3D print of the shark costume were infringing Katy Perry’s rights under U.S. copyright law.

Perhaps to the surprise of Katy Perry’s lawyers, in this case, they received a response from an NYU law professor representing the owner of the online store.

The law professor tweeted that he felt the left shark was not copyrightable because it qualified as a “useful article” which is not protected the same way as an artistic work. The law professor also sent a letter in response to Katy Perry’s lawyers, questioning whether the singer’s lawyers had over-asserted the strength of their client’s rights.

In his letter, the professor wondered what Katy Perry could possibly have to gain from their declared war on the left shark internet meme. He asked why the lawyers for Katy Perry could feel that the costume of a shark is copyrightable in view of the fact, he stated, that the U.S. Copyright Office has made it clear that costumes are not. It should be noted however, that another law professor has also weighed in on the subject stating that an animal costume can be copyrighted, so long as it is not generic.

Regardless, the law professor representing the online store owner made it clear that his client just wanted to go back to his business and would be grateful if Katy Perry’s lawyers would just back off. As the law professor said, going ahead with a dubious copyright claim would not benefit Katy Perry. He also questioned whether the NFL rather than Katy Perry had ownership of any copyright interest in the costume.

But indeed, if Katy Perry did design the costume or had a designer transfer their copyright interest to her, and if she felt she might use it in future shows and possibly even sell replicas herself at concerts, even if the NFL had control over the content of the Super Bowl halftime show, this is what copyright law also requires of anyone owning a copyright - a quick assertion of their rights upon learning of any infringement of them.

To a performer in today’s spotlight across all mediums of the universe which can be very bright indeed, the performer’s intellectual property is their most valuable asset. In 1985, Michael Jackson bought the publishing rights to most of the Beatles songs for a mere $47.5 million. Today this amount looks ridiculously small, and in fact it was even then. The purchase of the Beatles catalogue meant that Jackson was free to license any song previously owned by the former music publishing arm of The Beatles to any brand he chose.

Jackson was later able to sell his rights to Sony for $95 million and still acquire half ownership in Sony/ATV Publishing as well, a company which today is worth billions. (ATV had previously purchased the Beatles catalogue from Northern Songs, the Beatles publishing arm.) Due to a notoriously terrible contract John Lennon and Paul McCartney signed at the start of their career, Northern Songs owned the publishing rights to over 250 Beatles songs, including all of their hits at height of Beatlemania.

The online store owner attempting to sell Katy Perry’s shark costume perhaps summed up the perspective of the small entrepreneur who receives cease and desist letters today with a few choice words. He said it appeared to be easier to deal with world leaders like Kim Jong Un or Chris Christie and that he would go back to making pieces about them and other world leaders (although we’re not sure Chris Christie would qualify as such). His final thought on the subject was more astute - “All this lawyer crap is very stressful.”

Dealing with lawyers preventing a small business person from making a little money can indeed be very stressful. But this is what trademark and copyright law requires of the attorney who has been tasked with protecting every possible intellectual property asset of their client. The lawyer may not like putting the strong arm on a business person just trying to make a living, but for the business person who now has to give up a line of products he or she may have invested some money in producing, and who may have done so without thinking of the consequences when they should have known better, there is considerably more stress felt upon receipt of a lawyer’s cease and desist letter.

While the seller of the coffee cups with Taylor Swift lyrics printed on them and the maker of the 3D prints of the left shark in Katy Perry’s Super Bowl performance may not have anticipated they were infringing anyone’s copyright or trademark interest, neither should Taylor Swift nor Katy Perry be criticized when trademark law and copyright law requires them to have their lawyers do exactly what they did, namely to aggressively protect their clients’ intellectual property rights.     

Is it necessary for a lyricist or songwriter to prevent their lyrics from being sold on any type of item? Under trademark law as it exists today, probably so, if the lyrics are so distinctly associated with the songwriter and performer that they have acquired secondary meaning under the law.

Is it necessary for a performer to prevent others from selling the same costume they create or have someone else create for them to use in a performance? Under copyright law, probably so as well, if the artist wants to retain the exclusive right to use the costume in future performances thus acquiring an even stronger acquired secondary meaning that will allow that artist to copyright the costume and later sell it themselves as a Halloween costume.

If Jimmy Buffet had a Parrothead costume, which for all we know he may have, and he used it in his performances, no one would question his right to have it copyrighted. The name, Parrothead, is already trademarked by Jimmy Buffet and his company, Margaritaville Enterprises, for various products.

Today, however, the brand of a performing artist, sports figure or model is so much bigger than just their music, their achievements on the field or their photos, it’s everything else that allows them to market themselves across all the different platforms available to them today. And that is why too a celebrity must also be careful not to appear to be petty at the expense of the little person.

Unfortunately for the celebrity, in today’s world when their every action and those of their attorneys are publicized, even when they do exactly what is required of them by trademark and copyright law, their actions can appear to be unjustified.

While it may be important to protect one’s intellectual property, because of he importance of their brand’s image, a celebrity would not be wise to sic their lawyers on an autistic little girl’s lemonade stand selling hand drawings of their celebrity client to help pay for her mother’s cancer treatment. And let’s be clear, we know of no such instance having occurred to date and we doubt any celebrity would ever knowingly have their attorneys take such an action.

We should also make it clear that copyright and trademark laws are essential and are crucial to protecting the rights of the creative artist who develops a screenplay or produces a film, writes music or a book or creates a line of clothing or jewelry or anything else due to their talent as artists and creative people against those who would sell pirated copies of their films, produce knock offs of women’s handbags or designs of clothing, or of an artist’s paintings. Our firm, just like any other firm who practices copyright and trademark law will proceed against such a copyright or trademark infringer without a second thought.

But there must obviously be some balance between protecting one’s intellectual property while allowing the little person to sell a product that has only a tangential relationship with a celebrity. What is thus needed is a change in the law that allows both parties to coexist peaceably and which does not, by their coexistence, cause the celebrity to forfeit their intellectual property rights if they choose to allow the little girl at her lemonade stand to sell her drawings without receiving a letter from an attorney.

Perhaps when the copyright and trademark laws are rewritten, that balance and peace between the celebrity and the little guy or girl will be restored while still allowing the creative artist’s lawyers to proceed with all the resources at their disposal against pirates who would seek to profit in large scale off the back of the creative artist.

http://www.hg.org/article.asp?id=34586