Commentary on the Scope and Application of The Portability Regulation (Regulation (EU) 2017 / 1128)

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Since 1 April 2018, the Portability Regulation (Regulation (EU) 2017/1128) prohibits geo-blocking of online content within the European Union. An Open Access commentary on the Scope and Application of the Portability Regulation co-authored by Sebastian Engels and Jan Bernd Nordemann provides useful guidance on the requirements of the Portability Regulation for all actors in the digital content economy.

Since 1 April 2018, the Portability Regulation prohibits geo-blocking of online content within the European Union. The regulation regulates the unrestricted access to (paid) subscribed online content of all European citizens, regardless of where they are present in EU territory. The presence must be “temporary”. Providers of fee-based online content are then obliged to guarantee their subscribers cross-border portability. A limitation of the access or the demand of additional fees is prohibited. The Portability Regulation does not apply directly to offers that are not or not directly liable to payment, such as media libraries. It is rather voluntary for these providers. Furthermore, the Portability Regulation also includes rules to minimize the user’s personal data collected in order to identify the Member State.

As a useful guidance on the requirements of the Portability Regulation for all actors in the digital content economy an Open Access commentary on the scope and application of the Portability Regulation co-authored by Sebastian Engels and Jan Bernd Nordemann has been published in JIPITEC – Journal of Intellectual Property, Information Technology and E-Commerce Law.

The commentary can be freely accessed via the following link:
https://www.jipitec.eu/issues/jipitec-9-2-2018/4728

Inventive Plants and Ani­mals can be patented after all!

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The Board of Appeal of the European Patent Office declared Rule 28 (2) EPC void. The Rule was introduced last year to prevent patenting of plants and animals resulting from processes involving breeding steps. However, such exclusion was not justified under the European Patent Convention according to the Board.

On December 5, 2018, the Board of Appeal in case T 1063 / 18 reviewed a decision of an Examining Division of the European Patent Office (EPO) refusing grant of a patent directed to pepper plants. The claimed invention pertained to sweet pepper plants having increased color and size and which resulted from a smart-breeding process involving steps of crossing and selection. During examination of the application the Examining Division refused product claims to sweet pepper plants as being excluded from patentability under Rule 28(2) of the European Patent Convention (EPC), which was newly introduced in 2017.

The patenting of plants and animals, and breeding processes of plants and animals, have been the subject of many court cases at the EPO until today. In Article 53b EPC, substantive European patent law excludes from patentability all inventions that are directed to essentially biological processes for the production of plants or animals. The exclusion of Article 53b EPC was extensively analysed and interpreted by the highest judicial instance of the EPO in the infamous “tomato and broccoli I” cases (G 2 / 07, G2 / 08), in which the Enlarged Board of Appeal (EBoA) used an unusually broad interpretation of the exclusion to prohibit patenting of any process involving crossing and selection of genomes independent of other technical steps. Subsequently, in “tomatoes and broccoli II” (G 2 / 12, G 2 / 13) the EBoA however clarified that the broad exclusion under Article 53b EPC is applicable only for process claims. In other words, patent protection is still available for the plants or animals as such produced with such methods, provided they comply with all other requirements of patentability.

In the wake of tomatoes / broccoli II, many interested parties were unsatisfied with the implications, and lobbying and political engagement apparently led the European Commission to retroactively interpret the Biotech Directive, the blueprint for the European biotech patent law, to allegedly exclude patentability of such plants and animals. Under such pressure the EPO last year introduced a new Rule 28(2) EPC explicitly excluding patentability in respect of plants or animals exclusively obtained by means of an essentially biological process. From then on, applicants of such technologies at the EPO had to ensure to carve out any claims to their inventive plants and animals to avoid refusal of their application. Often the introduction of a disclaimer of plants and animals was used.

In the case now decided, the applicant did not follow this procedure and instead appealed a decision to refuse a patent to pepper plants under new Rule 28(2) EPC. Interestingly the Board of Appeal came to the conclusion that the introduction of the new rule by the EPO was in clear conflict with Article 53b EPC as interpreted extensively by the EBoA in the tomato and broccoli I and II cases, and that therefore the Rule is null and void. Under tomato and broccoli II the EBoA explicitly saw no problems with claims to plants and animals under Article 53b EPC. Since articles of the European patent convention prevail in case of a conflict with a rule, patents can be granted in respect of plants or animals exclusively obtained by means of an essentially biological process. Rule 28(2) EPC obviously was introduced in contradiction of the original convention – a fiasco for the administrative council of the EPO.

Conclusion

The decision is not only positive for applicants involved with plant and animal technologies, but also a positive signal for all users of the European patent system. The decision ensures legal predictability of the European patent system and underlines independence of the Boards of Appeal. Political turnarounds cannot be easily formed into new rules without proper legislative procedure. If there is a public interest to exclude patentability of plants and animals, only a diplomatic conference can change substantive European patent law (the Convention) and this will rightly involve democratically legitimized parliaments of the member states.

How to deal with this now

There are also practical implications of the decision: it is highly advisable in all pending examination procedures to remove from claim sets any disclaimers of plants and animals that were introduced to circumvent the exclusion of Rule 28(2) EPC. Claim your inventive plant and animal technologies!

Caution when referring to Industrial Property Rights! The indication “Patent Pending” may be misleading.

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In a recent decision, the Higher Regional Court of Munich ruled that the advertising statement “Patent Pending” can be misunderstood in Germany and is therefore be regarded as unfair competition (file no.: 6 U 3973 / 16). This also applies if the advertiser or associated third party is the holder of a patent application. German trade circles could infer from the English indication “pending” that there exists a patent in the sense of a granted patent.

Background

It is well known that the patent examination proceedings can take a long time and that there is often a need for the applicant to draw attention to a special technical position of the product in relation to other products on the market before the patent is actually granted. This is all the more true since the applicant does not have to be unprotected until the patent is granted, but can be awarded appropriate compensation for the unauthorized use of the published invention pursuant to Sec. 33 German Patent Act. However, this requires that the user of the invention is acting in knowledge of the application, so that for this reason, too, the applicant has an interest in referring potential users of his invention to the disclosed patent application with a respective note.

However, caution is always required when using foreign-language information in the context of product marketing. Under German Unfair Competition Law, misleading commercial practices are inadmissible. In the case of advertising statements which can be understood in different ways, a misleading commercial practice is to be assumed already if a relevant part of the target public understands the statement in a way which does not correspond to the actual circumstances.

The advertising statement “Patent Pending” is widely used in English-speaking business to point out that no patent has yet been granted for an advertised product or parts thereof, but that such a patent has been applied for. From this practice, however, it must not be concluded hastily that also the German consumer understands the term in the same way.

Decision

This was the case in the decision made by the Higher Regional Court of Munich: The product packaging of an interdental cleaner contained the reference “Patent Pending” and a corresponding patent had been applied for but not yet granted. The court stated that the products marketed by the advertising company were aimed at the general public. However, only that part of the addressed public which has a detailed and in-depth knowledge of the English language or is already familiar with the subject of advertising with references to Industrial Property Rights would correctly understand the indication “patent pending” as an indication of a “only” pending patent application. This should however not be assumed for the wide mass of German consumers. “Patent pending” is not a term used in colloquial English. According to the court, a substantial part of the German public would be at risk of being misled, since the term “patent pending” is likely to be considered as to have the same meaning as the term “granted” patent. When stating “patent pending”, the German consumer will simply assume that a “patent” already exists which is described in more detail by the further foreign-language word “pending”.

Conclusion

The decision did not come as a surprise. Already in 1996, the Higher Regional Court of Düsseldorf had ruled in a similar case that the abbreviated statement “pat. pend.” is not correctly understood by German trade circles and can therefore be misleading. The ruling of the Higher Regional Court of Munich thus serves as a reminder that German consumers may not be expected to have in-depth knowledge of foreign languages and that there may be a liability risk in the case of advertising with foreign-language information. This applies in particular if the product advertising is directed at the general and thus broad public. If, on the other hand, the advertising is aimed exclusively at the specialist public who are familiar with English terms, this may be different. A less strict standard may apply in the case of a professional public.

General Data Protection Regulation (GDPR) – Trans­parency obligations for companies

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The GDPR introduced new and in some cases deviating regulations with regard to data protection information obligations. In particular, companies should review their data protection declarations and consent procedures in order to avoid fines and official objections. Becoming GDPR compliant can certainly be seen as an opportunity to eliminate previous flaws with regard to transparency in data processing and ensuring the effectiveness of existing declarations of consent.

Transparency in the handling of personal data is an integral part of data protection. Data subjects should always have the opportunity to understand who is processing which data, when and for what purpose. Accordingly, data protection law contains a large number of transparency obligations designed to ensure transparency in data processing.

Duty to provide information when collecting data

The GDPR contains an extensive catalogue of provisions requiring the controller to inform potential data subjects on the scope of data processing, which are reflected in Articles 13 and 14 of the GDPR. In addition, Article 12 GDPR contains specific provisions on the form in which the information must be provided, namely in a precise, transparent, comprehensible and easily accessible form in clear and simple language.

Art. 13 and Art. 14 GDPR list obligatory information, which must be communicated to the data subject. It is of particular relevance that according to Art. 14 GDPR, the data subject must also be informed if the data is not collected directly from the data subject but from another source, e.g. from the Internet or via a lead provider. Although Art. 14 allows for a number of narrow exceptions to this principle, these will normally not be relevant, in particular for the collection of personal data for commercial purposes.

Further information and disclosure obligations

In addition to Art. 13 and Art. 14 GDPR, the GDPR contains further transparency obligations, some of which go beyond the previously applicable obligations. According to Art. 15 GDPR, for example, the data controller must provide the data subject with comprehensive information on the data stored and processed in relation to this data subject. Insofar as a controller invokes a legitimate interest, the data subject must be informed of his right to object pursuant to Art. 21 para. 4 GDPR.

Consent under the GDPR

Of particular importance is the transparency of data processing also in connection with obtaining consent for data processing, which is often overlooked by the responsible controller. Compliance with the transparency rules and information obligations is particularly important in this context, as a lack of transparency can, in case of doubt, lead to the ineffectiveness of the consent and thus to the illegitimacy of the data processing carried out on the basis of the consent as a whole.

Particularly when obtaining consent through pre-formulated texts, it must be ensured that the type, purpose and scope of data processing is made clear from the text of the consent in plain, intelligible and simple language in order to ensure that the consent is “informed” and therefore valid. In addition, the data subject must be made aware of his or her right to revoke consent at any time. Finally, consent must be given actively so that implicit acceptance of the declaration is not an option.

Of practical relevance is the question of the extent to which consents obtained in the past, i.e. before 25 May 2018, continue to be valid under the GDPR. It follows from recital 171 of the GDPR that existing consents remain effective provided that their nature corresponds to the conditions of the GDPR. Accordingly, the association of the German supervisory authorities for data protection (Düsseldorfer Kreis) also regards previously effective consents as still valid, at least in principle, if they were obtained in accordance with the requirements of the old version of the German Data Protection Act (“BDSG”). However, this does not apply to the consent of minors who had not yet reached the age of sixteen when the consent was granted, because under the GDPR, minors under the age of sixteen cannot grant consent without the consent of their legal guardians.

Against the background of the increased liability for data protection violations under the GDPR, we recommend, that existing consents be critically re-examined in any case as to their compatibility with the requirements of the GDPR. In this respect, it should also be borne in mind that the willingness of affected customers to give their consent in connection with the conversion to the GDPR is likely to be significantly increased. Accordingly, the switch to the GDPR should also be seen as an opportunity to “improve” the data protection consents and to avoid legal risks for the future.

Conclusion

The GDPR introduces new and in some cases deviating requirements with regard to transparency obligations. In particular, companies should review their privacy policies and consent procedures in order to prevent future fines and official objections. In this context, the conversion to the GDPR can well be seen as an opportunity to eliminate previous flaws with regard to transparency in data processing and ensuring the effectiveness of existing declarations of consent.

Implementation of the EU Trade Secrets Directive – German Government Draft Published

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The EU Trade Secrets Directive must be implemented into national law. Following the much-discussed draft by the Federal Ministry of Justice and Consumer Protection, the legislator has now published the government draft. Although many questions remain unanswered, German companies can now better prepare for the implementation of the EU Trade Secrets Directive.

The EU Trade Secrets Directive must be implemented into national law. After the draft bill of the German Federal Ministry of Justice and Consumer Protection has met with a divided and partly very critical response from industry, academia and legal experts, the legislator has published a revised government draft which at least in regard to some aspects has taken up the criticism. Although many questions remain unanswered, German companies can now better prepare for the implementation of the EU Trade Secrets Directive.

Concept of “reasonable confidentiality measures” still unclear

The German legislator has refrained from further defining the concept of “reasonable confidentiality measures” contained in the Directive. The concept of “reasonable confidentiality measures” is of central importance, since information can only constitute a trade secret if it is the subject of “reasonable confidentiality measures”. Ultimately, the legislator’s decision not to legally define such measures is understandable: the Directive already makes it clear that the circumstances of the individual case must determine which confidentiality measures are reasonable in each case.

This case-by-case assessment has advantages and disadvantages for companies. For trade secrets that have a comparatively low value, only comparatively minor confidentiality measures are required. A disadvantage of the case-by-case evaluation is that in practice it will hardly be possible to determine individual secrecy measures for each (potential) trade secret within a company. In addition, the reasonableness of confidentiality measures will have to take into account not only the value of a trade secret, but also other factors such as the individuality of the trade secret and the effort involved in creating the trade secret.

Consequently, in the explanatory notes of the government draft, the legislator also states that the specific types of confidentiality measures depend on the type of trade secret in question and the specific circumstances of its use. According to the legislator, both physical access restrictions and precautions as well as contractual security mechanisms can be considered. It is not necessary to mark each piece of confidential information separately, but measures can in principle be taken for certain categories of information (see below) or specified by general internal guidelines and instructions or also in employment contracts. In assessing the adequacy of the protective measures, particular consideration may be given to the value of the trade secret and its development costs, the nature of the information, its importance to the enterprise, the size of the enterprise, the confidentiality measures customary in the enterprise and contractual arrangements agreed with employees and business partners.

Categorization of Trade Secrets Recommended

There are two possible solutions for companies to avoid having to determine individual secrecy measures for each trade secret: First, it is possible to apply to all trade secrets those confidentiality measures that are reasonable to the most valuable trade secret. However, this can lead to unnecessary effort and may slow down the work processes with regard to less valuable trade secrets. It therefore seems more advantageous to us, after analysing the existing trade secrets in a company, to develop several categories with regard to the value and need for protection of trade secrets and to develop and establish reasonable confidentiality measures for each category.

Safeguarding of Trade Secrets During Litigation

Of particular interest to companies are also the possibilities provided in the government draft for the protection of trade secrets in court proceedings. In this respect, the government’s draft contains both good and rather disappointing provisions. For example, at the request of a party, the court may classify information as requiring complete or partial secrecy. However, such information nevertheless comes to the knowledge of the other party, its lawyers and, if necessary, witnesses and experts involved in the proceedings. It would be desirable if the legislator were to provide for more effective measures here to achieve the secrecy of information requiring secrecy in the trial.

While the draft bill provided for an administrative fine of only up to EUR 1,000.00, for litigation parties using or disclosing information classified as confidential by the court, the legislator has meanwhile corrected this and provided for a much more appropriate (however in our view still insufficient) fine framework of up to EUR 100,000.00. A negative aspect of the procedural provisions is that the company whose secret know-how was infringed has to sue where the infringer has his place of jurisdiction. According to the government draft, it is unfortunately not possible to bring an action before any court or before a court in whose district the infringing act occurred. This is to the advantage of the infringer and to the disadvantage of the injured party.

On the positive side, there is a provision for a kind of pre-procedure in which the infringed party, whose trade secrets have been obtained or disclosed, can apply for procedural secrecy measures before service of an action on the opposing party in proceedings on the merits. This possibility should in any case be used to ensure the protection of the trade secrets at issue. Strangely enough, the possibility of such prior proceedings is not provided for the infringed party in preliminary injunction proceedings. It is to be hoped that the legislator will change this. Fortunately, the legislator in the Government draft has now extended the infringed party’s right to information including the “path” taken by the trade secret after their unauthorised disclosure.

Conclusion

With the Government draft for the implementation of the Trade Secrets Directive, the legislator has taken up some of the aspects discussed in the context of the publication of the Ministerial Draft and has modified the Ministerial Draft as shown above. Nevertheless, many questions still remain unanswered, so that in many aspects the Government draft is unsatisfactory for trade secret holders. It remains to be seen how the Government draft on the protection of trade secrets will be discussed, especially in German parliament.

As of today, it is expected that this law will come into force in winter / spring 2019.

We will continue to monitor the legislative process. Companies operating in Germany should start now at the latest to develop secrecy concepts and to develop and implement classification systems for trade secrets and the corresponding secrecy measures in order not to lose valuable know-how rights when the law comes into force.

The EPO is making ano­ther attempt at Deferred Examination

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The EPO launched a new online user consultation on the possibility of allowing more flexibility in the timing of the examination process by offe-ring means to postpone the examination of European patent applications. This new user consultation was to be seen in context of the “Early Certainty” initiative and the previously initiated and stopped attempt to implement “User-Driven Early Certainty”, which was supposed to allow applicants to postpone the start of substantive examination by a maximum of 3 years. The primary objective of this new user consultation was to receive the views of all stakeholders on the advantages and drawbacks of a postponed examination scheme in the European patent grant procedure. The new user consultation shows that the EPO is currently planning to make another attempt at implementing deferred examination.

Since the launch of the “Early Certainty” initiative in 2014, the EPO has been advertising that the office has significantly reduced the length of the patent grant procedure. The still to achieve goal of this initiative is to reduce the average time for examining an application to 12 months. While some stakeholders have generally welcomed the faster processing of applications, as it provides information on the outcome of examination at an earlier stage, other stakeholders have argued that there are various instances at which applicants might need more time before the grant of a patent, for example, to adapt the claims to the parallel development of corresponding products or to determine the final choice of countries in which the patent is to be validated.

In the present EPO system, examination of EP-direct applications must be requested and the examination fee must be paid within 6 months of the publication of the search report and examination of Euro-PCT applications must be requested and the examination fee must be paid, in most circumstances, on entry to the European regional phase. Under this current system, the applicant has only a few means to start examination at the EPO earlier, such as by requesting early processing under Article 23(2) or 40(2) PCT, or to accelerate examination proceedings, such as by filing a PACE request or by waiving the Communications under Rules 161, 70/70a EPC. However, the applicant has otherwise no control over when examination begins. This is entirely dependent on when the EPO takes up the application for examination.

User-Driven Early Certainty (UDEC)

For the above reasons, the EPO presented again a proposal for deferred examination in autumn 2017, which was finally called “User-Driven Early Certainty (UDEC)” (initially: “Early Certainty with Flexibility”). UDEC was planned to allow applicants to postpone the start of substantive examination by a maximum of three years.

Deferred examination systems have been available in multiple countries, including all other IP5 Offices. One prominent example is also the German system where an applicant has a period of seven years from the date of filing in which to request examination and pay the examination fee. This has turned out to be attractive for applicants, who would like to make strategic decisions in context of the grant of a patent at a later stage. Such deferred examination even provides advantages for global patent strategies, because some applicants file a German national phase patent application in parallel to a Euro-PCT application and do initially not request examination for the German patent application to see how the European patent application turns out. That is, the German national phase patent application can serve as a sort of “back-up” for the case that the European patent application does not get granted with the desired scope and the applicant can “activate” the German patent application whenever desired within these 7 years. The German patent community has made good experiences with its deferred examination system and has thus been supporting deferred examination at the EPO.

The basic idea of UDEC was that an application, whether EP-direct or Euro-PCT, would proceed as so far up to the payment of the examination fee. Thus, as usual, the (S)EESR would be produced and the applicant would have to file a response to the ESOP. The applicant would also have to pay the examination fee according to the present rules of the EPC.

The new part would have started with the payment of the examination fee by the applicant. At this stage, the applicant could file a request to postpone examination for up to three years. The applicant would have been able to lift the postponement on request. Apart from the examination fee, no other fee would have been required. The new part of UDEC also included the option for a third party to file substantiated, non-anonymous (but with strawman filings being possible), third party observations. The effect of doing so would have been to lift the postponement of the examination of the application. No fee would have been required for lifting the postponement.

UDEC was also considered to provide advantages for the EPO. For example, the EPO could avoid the examination of applications in which applicants lost interest during the deferment. The overall expected effect of UDEC was that it could reduce, or at least more evenly distribute, the existing backlog. Moreover, as there were no fees involved in the proposal, the EPO considered that it could have been introduced as a change in practice with no need for a change of any rules.

However, there are also disadvantages for third parties. The period of legal uncertainty would be extended by several years. If third party observations needed to be filed, such as in context of FTOs, to lift the deferment, it may be necessary to carry out costly prior art searches and evaluate the results so that sufficiently substantiated observations can be filed.

The EPO held a user consultation for interested parties, including epi, at which the proposal for UEDC was discussed. Some parties were overall in favour and some were completely against the proposal. The content of the proposal was changed in response to user comments but maintained to be differed from the three year postponement from filing that the other IP5 Offices offer.

After controversial discussions in various official groups, which mainly went against the proposal, the proposal was not presented to the next meeting of the Administrative Council (AC) and was not pursued further by the EPO.

New User Consultation

In November 2018, the EPO launched a new online user consultation to again assess the interest of the stakeholders in increased flexibility in the timing of the examination process. This new online consultation remained open for everyone until 11 January 2019 and some members of this law firm also submitted their comments.

By this new user consultation, stakeholders could submit their answers to a variety of questions regarding the following topics:

  1. Need for more flexibility in the timing of examination
  2. Possible features of a deferred examination system
  3. Mechanism for third-party activation of deferred examination
  4. Office activation mechanism in a deferred examination scheme

Office-Driven Examination Control (ODEC)?

Overall, it appears that a careful balancing of the various interests of the applicants, the parties and the EPO could lead to a system of deferred examination at the EPO. On the one hand, it is argued that as long as the EPO continues to provide an EESR including an ESOP and the applicant is obliged to file a response to the ESOP and pay the examination fee, the applicants as well as third parties would have a reasonable basis to estimate what might happen during deferred examination proceedings. On the other hand, it is evident that the argumentation provided by the EPO in the ESOP is not carved in stone and unforeseeable claim amendments can of course be performed by using features from the description, so that there of course remains a certain degree of uncertainty about the outcome of the examination proceedings, which is immanent to deferred examination.

The new user consultation shows that the EPO is currently planning to make another attempt at implementing deferred examination. As such a potential upcoming system would be proposed by the EPO, the term “Office-Driven Examination Control” (ODEC) was already suggested. It remains to be seen whether the new user consultation will lead to a new initiative by the EPO and whether such a new initiative will have higher chances to be approved by the stakeholders in the various EPC member states as it was the case for UDEC.

Deferred examination would allow for an increased flexibility for the grant proceedings at the EPO and more means to shape the global patent strategy for corporations. We will certainly look out for upcoming legal changes in context of deferred examination and will advise our clients accordingly.

No infringement of copy­right protected product at (international) trade fair in Germany

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In a recent decision (file number I ZR 92/16), the German Federal Court of Justice ruled that the mere presentation of a product at a trade fair in Germany does not imply that the exhibitor specifically offers this product with the purpose to allow trade fair visitors to (later) purchase the product in the domestic market. Such deliberate advertising is not to be expected if the exhibitor clearly points out to the trade fair visitors that they cannot purchase or order the exhibited product because it reserves the right to make changes to the product.

The applicant is the legal successor of the licensee with the right to manufacture and distribute legless steel tubular chairs, following the example of a famous chair created in 1926, so called Mart-Stam-Chair.

The Defendant is a Polish company, which exhibited a similar chair model named “Zoo” in different versions at the international trade fair ORGATEC, Cologne, for trade professionals only, during the period from 21st to 25th October 2014, and depicted respetive chairs in various advertising materials and product catalogs, however, with the notice that (i) the collection could only be ordered from 2015 on, and that (ii) the “Zoo” series is still in the development stage. Further, on the floor of the defendant’s exhibition stand, right next to the chairs, the notice “prototype” was located.

Against this background, the plaintiff handed over a warning letter at the trade fair on 21 October 2014, setting a deadline to provide a signed cease and desist declaration until 8 pm on the same day. Following this, the parties started arguing about the reimbursement of the cost regarding the preparation of the warning letter.

Decision

In the first-instance proceedings before the district court of Dusseldorf (judgment of 18 June 2015, file number 14 c O 184/14) the court issued a partial dismissal of the claim based on the consideration that the warning letter was legitimate regarding the distribution and bringing to public of the pictures of the chairs, but not with respect to the reproduction of pictures of the chairs (reason: the calatogues were printed in Poland and not in Germany) and also not regarding the offering and distribution of the chairs. The appeal before the Düsseldorf Higher Regional Court, (judgment of 19 April 2016, file number I-20 U 99/15) by the plaintiff was unsuccessful. With the further appeal, the plaintiff continues to pursue its claims for reimbursement of additional costs, but in the end without success.

The further appeal was rejected by the German Federal Court of Justice, basically confirming the reasoning of the Court of Appeal. While the chairs shown on the trade fair do fall within the scope of the chairs of the plaintiff which are protected by copyright, neither the fact that the chairs were shown on the trade fair nor the fact that they were depicted in catalogues were considered an infringement of the plaintiffs rights of distribution, which means the right to offer the original or copies of the work to the public or to bring it to the market, according to Sec. 17 German Copyright Law. Instead, due to the notice “prototype” it is clear that the chairs were not dedicated to be delivered to (German) customers. Therefore, the defendant did not advertise for the acquisition of the chairs still to be produced later. Further, it cannot be established that the chairs in their final design fall into the scope of protection of the Mart-Stam-chair.

With reference to the earlier Keksstangen decision (GRUR 2015, 603 par. 21), the Federal Court of Justice stated that there is no empirical premise that the presentation of a product at an national trade fair should always encourage visitors to purchase this product in the domestic market. Thus, there is a regular lack of targeted advertising for the purchase of the exhibited product, if not a ready-for-sale product, but only a prototype or a design study is exhibited in order to test the reactions of the market to a product that is still in the devlopment stage (BGH, GRUR 2015, 603 ff. Par. 22 – Keksstangen). This applies in particular to international fairs, which also service to establish business relations between foreign parties without domestic reference.

As a result, the Federal Court of Justice concluded that the Court of Appeals, without error of law, assumed that the exhibition of the chair model “Zoo” at the trade fair did not constitute a risk of first infringement of the exclusive right of the owner of the copyright to distribute the Mart-Stam-Chair.

Conclusions

Already back in 2010 the Federal Court of Justice ruled in the Pralinenform II decision (22 April 2010, file number I ZR 17/05 – a trademark infringement case) that like in the above mentioned Keksstangen decision (a case regarding infringement of the Act against Unfair Competition) the mere presentation of a product at a German trade fair cannot automatically be considered an offer of these products or a putting of these products on the German market. With the above mentioned decision the Federal Court of Justice now extents those reflections to copyright cases and confirms that even in the case of a product presentation in Germany, an initial risk of copyright infringement (and, possibly, other legal violations) may not be accepted, even if the exhibited product falls within the scope of a copyrighted work. This applies, in particular, to an international trade fair, which is characterized by the fact that exhibitors from various countries are addressing domestic and foreign customers. This decision is in line with the above mentioned earlier decisions, which as a result seem to indicate a trend to a more restrictive assessment of intellectual property infringements on trade fairs. However, while the Federal Court of Justice until now has not issued a corresponding judgment in a patent infringement case, according to settled case law of the Higher Regional Courts the presentation of a product at a domestic trade fair constitutes an offer within the meaning of Sec. 9(2) No. 1 German Patent Act, unless the trade fair is a mere performance show. It remains to be seen whether the Federal Court of Justice will expand the above considerations also to corresponding patent infringement cases.

Nevertheless, it shall be noted that also in the above mentioned case regarding the Mart-Stam-Chair the infringement claim was legitimate as regards the distribution (Verbreiten) and bringing to public (Öffentlich-Zugänglichmachen) of the pictures of the chairs in catalogues. Thus, exhibitors and right holders participating in German trade fairs in the future should carefully consider the above, in particular the exhibitor should avoid to hand out or present on the exhibition stand catalogues and advertisement material containing the respective potential infringing product, while in contrast, the right holder should specifically look for respective materials because he might not be able to claim infringement due to the mere exhibition of the product itself.

Amendments to the Ger­man Trademark Act

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On 16 December 2015, Directive 2015/2436 of the European Parliament and the Council to harmonize the laws of the Member States relating to trade marks (the “Directive”) was adopted. The harmonization of the national trademark systems provided for in the Directive must be largely implemented into national law by the member states by 14 January 2019. In the meantime, the draft bill (subsequently also “MarkenG-E”) for the necessary amendments to the German Trademark Act has been submitted.

The main objective of the Directive is the balanced coexistence of European Union and national trademarks, which are to be strengthened in their respective autonomy and at the same time co-exist side by side. In addition, the Directive and its national implementation should also provide trademark owners with more effective mechanisms to combat product piracy.

It is not yet clear when the amendment to the Trademark Act, which is now available in the draft bill, will enter into force. However, there are indications
that this will be the case even before the expiry of the transposition deadline of
14 January 2019.

The draft bill provides in particular for the following amendments to the Trademark Act, which are of special significance for trademark owners and applicants:

Elimination of the requirement of graphical representation of trademarks

Section 8 para. 1 MarkenG-E provides that the graphic representation of a trademark is no longer a prerequisite for protection in the future. It is sufficient (but also necessary) that the German Patent and Trademark Office (GPTO) and the public can “clearly and unambiguously determine” the subject matter of trademark protection. This means that, following the entry into force of the amendment to the law, it is also possible to apply for trade marks in particular for signs that are reproduced in audio or image file formats, such as acoustic signs or image sequences.

Extension of the catalogue of absolute grounds for refusal

The catalogue of absolute grounds for refusal is to be extended under the draft bill. The most important extension of this provision is that signs which include geographical indications of origin, indications of origin, traditional designations for wines, designations of traditional specialties or variety denominations can no longer be protected as trademarks, Section 8 Para 2 Nos. 9 – 12 MarkenG-E.

Trade names and company names as explicit trademark infringement

New Section 14 Para. 3 No. 5 MarkenG-E clarifies that the use of a protected trademark as a trade name or company name constitutes an infringement of a trademark if the trade name or company name is used for similar goods or services. In addition to the implementation of the requirements of the Directive, this amendment also corresponds to the approach that has been applied in German case law for many years with regard to the infringement of trademarks by trade names or company names.

Strengthened position of trademark owners in relation to infringing products in transit

The position of trademark owners is considerably strengthened by the new regulation provided for in Section 14a MarkenG-E. This explicitly extends the protection of trademarks to goods in transit, i. e., to potentially infringing goods originating from a third country and being destined for a market outside Germany. So far, legal options of trademark owners in Germany were limited and they were ultimately referred to legal action in the country of origin or destination. In the case of clear trademark infringements (i.e. if the sign is used on the goods is identical or highly similar to the trademark) the new regulation provides for a two-stage procedure.

In the first stage, German customs authorities can detain the goods in question, even if they are not to be placed on the market in Germany but in another country. If the declarant does not object to the detention of the goods, they shall be destroyed under customs’ supervision.

If the declarant objects, it is the declarant’s burden to prove in court that the goods concerned are intended to be lawfully put onto the market in a third country (e.g. because the trademark owner does not have trademark protection in that country, the declarant is a licensee or owns an earlier trademark).

Improvement of the legal position of licensees

Under the current version of the Trademark Act, licensees are only permitted to take legal action against third parties for infringement of the licensed trademark if the trademark owner has consented to this. Section 30 Para. 3 clause 2 MarkenG-E provides that licensees may, even without the consent of the trademark owner, bring an action for infringement of the licensed trademark if the trademark owner has not brought an action for infringement within a reasonable period of time after the “formal request” by the licensee.

New Section 30 Para. 6 MarkenG-E provides for a registration of licenses in the GPTO’s register.

Third party comments to trade mark applications

The amendment provided for in Section 37 Para. 6 MarkenG-E creates the right for individuals and legal entities as well as associations of manufacturers, producers, service providers, traders and consumers to file observations against trademarks of third parties at the GPTO in order to prevent these trademarks from being registered. This is likely to affect in particular those applications claiming protection for a term being common for a specialized public. However, the wording of the draft bill also makes it clear that there is no obligation on the GPTO to actually take into account the comments of third parties in the registration decision.

Extension of grounds for opposition

Under new Section 42 Para. 1 clause 2 MarkenG-E, proprietors of protected designations of origin or protected geographical indications may object to trademark registrations.

Introduction of an administrative procedure for the declaration of revocation or invalidity of trade marks

Sections 53 – 55 MarkenG-E provide for a significant change in the procedure for
declaring revocation or invalidity of trademarks. So far, only requests for invalidation of a trademark due to absolute grounds (e. g. lack of distinctive character) could be filed in an administrative proceeding at the GPTO. Revocation requests based on lack of genuine use of a trademark or its invalidation due to relative grounds had to be brought in regular court proceedings which in many cases involved considerable time and expense.

Under the new regulations provided for in the draft bill all requests for invalidation or revocation of trademarks can be filed with the GPTO. The German proceedings thus are harmonized with the current proceedings for EU trademarks.

Third parties having been sued on the basis of a trademark against which proceedings for revocation or invalidation are pending at the GPTO may also join these proceedings.

Introduction of guarantee or certification marks

New Sections 106a – 106h MarkenG-E introduce a new type of trademark, namely the so-called “Gewährleistungsmarke” (guarantee or certification mark) into German trademark law. In contrast to the existing types of trade mark whose primary function is to identify the origin of a product or service from the trade mark owner (“origin function”), the function of the guarantee or certification mark is to have certain characteristics of the product marked with the guarantee or certification mark (“guarantee function”) guaranteed by an independent party, i.e. the proprietor of the guarantee or certification mark.

Apart from other filing requirements (such as the filing of a statute and further information on the scope of the warranty with the application), guarantee or certification marks can only be applied for by applicants who do not engage in any activity involving the supply or provision of goods or services for which there is a guarantee. This restriction is intended to ensure that the guarantee or certification mark functions as an independent identifier for certain product properties.

Update UPC: Further De­lays and Obstacles

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More than 18 months after the UK voted for BREXIT, the start of the UPC system has now been severely affected by those further delays that most commentators had already expected shortly after the vote (see, for example, the B&B Bulletin special edition “the BREXIT and its consequences for IP rights“). In addition, Germany has now joined the UK in being the last and, possibly, final bottleneck for the UPC, as caused by some again quite surprising developments: time for a short update.

As a quick reminder, the coming into force of the Unitary Patent Court (UPC) system still requires ratification of the various international treaties (which, together, form the UPC system) by both the UK and Germany. As of today, while the system was supposed to finally enter into force in April 2017, both of these ratifications are still outstanding, and there is no clear indication as to when they will (and can) be provided. Let’s have a look at the different reasons:

Situation in the United Kingdom

Shortly after the BREXIT vote, many commentators expected the UK to entirely step away from the UPC system or, at least, to make it a substantial part of its negotiations with the EU. However, in the weeks and months following BREXIT, the UPC system found sufficient support on a political level (while, apparently, not being perceived as an EU institution), and the UK government seemed increasingly committed towards putting the system into force even prior to the UK leaving the EU. Thus, the UK proceeded with the ratification process, while still leaving some important details, including the supremacy of the European Court of Justice (ECJ), to its future negotiations with the EU.

In mid-2017, however, this process was again taken over by political developments. The start of the BREXIT negotiations, which many considered rather chaotic, the increasing time pressure and constraints created by the negotiations, and, in particular, the re-election process in the UK created additional obstacles, which have prevented the ratification process from being completed until today. As of now, there are still some formal acts that need to be processed by the newly formed parliaments in the United Kingdom, until the ratification can be considered finalized. It is currently being expected that this process will only be completed by mid 2018.

Situation in Germany

Immediately after the BREXIT vote, Germany, while continuing to be in firm support of the UPC system, suspended its ratification process, in order to duly evaluate the situation and not to pass on the task of finally putting the UPC system into force entirely to the UK. After the UK’s continued commitment towards the UPC system, however, the parliamentary process of ratification was resumed in Germany and was completed in due course before Germany’s general election in October 2017. The only missing piece for final ratification by Germany was (and currently still is) the formal signature under the treaties by Germany’s President. While the signature was already being prepared, however, yet another development took place which nobody had anticipated: A German individual, who turned out to be a Dusseldorf based patent lawyer, filed a constitutional complaint against Germany’s participation in the UPC system with the German Federal Constitutional Court (FCC). The FCC then asked the President to suspend the signing process, pending its review and decision on this complaint.

The complaint, which in the meantime has been made available for review to some selected organizations, is mainly based on an asserted violation of the constitutional principal of democracy, both in relation to the parliamentary process, and in relation to several material aspects of the UPC system:

  • In relation to the parliamentary process, the complaint refers to the circumstances surrounding the parliamentary vote and, in particular, the number of parliamentarians being present during the vote. Most commentators who have reviewed the complaint do not consider this issue as crucial, in particular as, from a practical point of view, the vote (which was unanimous) could be repeated at any time, as there seems to be a continued political will in Germany to put the UPC system into force.
  • As regards the material aspects of the UPC system, however, commentators see more reason to be concerned. Here, the complaint points to issues as regards the democratic legitimization of several of the UPC institutions, as well as the alleged lack of independence of the UPC judges. These issues have been discussed already during the preparations of the UPC system, and do in fact give rise to some legal debate.
  • In addition, the complaint alleges a non-compliance of the UPC system with European Union Law, which could lead the FCC to consider a referral to the ECJ. If such referral was being made, the expected delay would be even more significant.

The FCC has not yet provided any further indication on how and when they will progress in relation to this complaint. After receiving comments from legal organizations, they will need to decide whether to accept the complaint and open further proceedings, or to reject it. If the latter were the case, the ratification process in Germany could be resumed and completed rather swiftly. If the FCC, however, accepted the complaint and opened formal proceedings, the further process would again be severely delayed. In particular, if the FCC considered a referral to the ECJ, the delay is expected to extend beyond the end of the BREXIT negotiations, i.e. to after the UK leaving the EU. In this case, however, the original idea of the system being put into force prior to the UK leaving the EU would not be a possibility anymore and, most likely, there would be a need for further international treaties.

Conclusion

The long anticipated start of the UPC system has again taken some surprising turns, and is currently facing further delays and obstacles. Much depends now on the highest court in Germany, and the question how serious it will take the constitutional complaint. A significant further delay could in fact turn out to be more than just that, and could lead to the need for a further political process, the outcome of which would be impossible to foresee. On the other hand, and on a more optimistic note, if the complaint should be dismissed rather sooner than later, the political will, both in the UK and Germany, to put the UPC system into force still exists, and the preparations could be resumed at any time – with a starting date of the UPC system “sometime” in 2018.

We will of course provide a further update on these exciting developments in due course.

European Patent Office Revokes Broad Institute’s CRISPR-Cas9 “Gene Edi­ting” Patent

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The Opposition Division of the European Patent Office has revoked EP 2 771 468 B1, one of the fundamental CRISPR patents for lack of novelty, in essence due to formal irregularities in the priority claim. An appeal is pending.

CRISPR-Cas9 gene editing is the ground-breaking technology that has in the past 5 years tremendously transformed the field of molecular genetics, and will very likely revolutionize biomedical approaches in the future. The “CRISPR” or “gene editing” technology harnesses a bacterial defense mechanism which identifies and destroys foreign “harmful” DNA as a tool for the targeted manipulation of genomic DNA. Compared to other manipulation approaches gene editing does not leave any undesired traces or footprints in the edited genome and is easy to apply. Gene editing was developed and filed for a patent nearly at the same time by the University of California, Berkeley, and the Broad Institute of the Massachusetts Institute of Technology (MIT). Since then, both institutions bitterly fight over the control and dominance of the CRISPR patent landscape in the US and Europe.

Now, in a first instance decision, the European Patent Office (EPO) revoked Broad
Institute’s CRISPR Gene Editing Patent for a lack of novelty due to formal irregularities in the priority claim. What happened? The Broad institute originally filed a conglomerate of 12 US provisional applications in the name of the inventors disclosing their part of the CRISPR technology. These US provisional applications were then used as a basis for a priority claim in an International (PCT) application of the Broad Institute from which the later European CRISPR patent was derived (opposed European patent No. EP 2 771 468).

A valid priority claim in Europe requires that the applicant is able to demonstrate its right to priority, either through identity of applicants between the prior and subsequent applications, or by proving a transfer of the priority rights with assignment documentation. Remarkably, for the CRISPR patent, the patent owner could not provide evidence for the ownership of the priority rights for a significant number of originally filed US provisional applications. Their priority claim was rejected by the EPO resulting in a loss of the priority date and a subsequent novelty rejection. The patent was revoked during oral proceedings on January 17, 2018. However, the Broad Institute already filed a notice of appeal – so the struggle continues.

This prominent example demonstrates again the importance of a thorough and careful preparation of priority claims for Europe, in particular in cases with multiple priorities.