France ratifies the London Agreement

France has formally communicated its ratification of the London Agreement. This at last clears the way for the Agreement to come into force, which will happen on 1 May 2008. The consequent savings on translation costs will have a significant practical impact for patentees in those European Patent Convention states which are party to the London Agreement.

The European Patent Office ("EPO") acknowledges that translation costs can account for between 20% and 40% of the cost of filing for patent protection in Europe. As an example of the impact of the London Agreement, the EPO describes a situation where the patentee applies for a patent in seven states, five of which are parties to the London Agreement. The reduction in translation costs for a typical patent could be as much as 45%. As more states become party to the London Agreement, patent proprietors will be able to validate their patents in a greater number of states without having to meet almost prohibitive translation costs.

What does the London Agreement say?
A state which is a party to the London Agreement and whose official language is French, German or English (the official languages of the EPO), agrees to dispense with the patent translation requirements for the full patent. However, the patent claims will always be available in the three EPO languages. Other states which are parties to the Agreement will dispense with the full translation requirements if the patent is available in the EPO official language prescribed by that state. Only when this is not the case will a full translation of the full patent specification into the relevant national language be required. These states will continue to have the right to require a translation of the claims into one of their official languages.

In the event of a dispute relating to a European patent, a state can require the patentee (at the patentee's expense) to supply a full translation into that state’s official language following a request made either by the alleged infringer or by the court.

To which countries will the London Agreement apply?
From 1 May, the London Agreement will apply to all states which have both ratified it and deposited their instruments of ratification. As of today, these are Germany, the UK, France, the Netherlands, Luxembourg, Iceland, Latvia, Liechtenstein, Monaco, Croatia, Slovenia and Switzerland. Denmark and Sweden have made provision to amend their respective Patent Acts but have so far delayed deposit of their instruments of ratification. It is expected that many more EPC countries will ratify the Agreement now that the French have done so.

Click here for the London Agreement text, and for other background documents, see this blog at the right side under under "EPLA, everything you always wanted to know but were unable to find).

Rowan Freeland, Simmons & Simmons, London

DRM dead?

“IP 360” published an article, headed “DRM Technology For Music May Be Dead: Experts”, saying:

“The recording industry pushed digital rights management, or DRM, technology to protect its copyrighted music from piracy and maintain revenue streams, but under pressure from consumers, record companies have waved the white flag on encoding all of their music with DRM — a decision experts say forecasts the end of such technology in the music industry (…)”

The article is pretty much correct as far as it goes. But like much of these commentaries, it ignores the subscription model, wherein you pay something like 10-15 dollars/Euros per month for unlimited access to a library of millions of tracks. Services like Rhapsody (RealNetworks), Zune Marketplace (Microsoft), and Napster offer this. Such services use DRM and no one is talking about removing DRM from them – otherwise you would have a scenario where someone could sign up for one of these services, get a very fast broadband connection, download every track in the entire library (which would take maybe a few months), then cancel the service. Voila – 5-6 million music tracks for $50-100.

The aggregate subscribership of these services is maybe 4-5 million people worldwide, which is probably less than 1/10 the number of people who have downloaded tracks from iTunes, but it is growing at 100% per year. The generally accepted wisdom is that clunkiness of transferring tracks from PCs to portable devices is holding back further growth of this business model, so when cheap portable devices with wireless broadband come out (say 2010), the subscription model is expected to take off more rapidly.

Bill Rosenblatt, GiantSteps Media Technology Strategies (http://www.giantstepsmts.com/index.htm)

Gemstar EPG patent strategy, sue first then talk

Our prediction on December 8, 2007 what would happen after the acquisition of Gemstar by Macrovision proved right (see “Macrovision acquires Gemstar, a more aggressive IP policy ahead”. Last week Gemstar sued Virgin Media for patent infringement before a UK court.

Gemstar holds IP rights to a number of “interactive television”, or, more precisely, EPG (Electronic Programming Guide) patents, in the US also known as “interactive programme guides” or IPGs. Through that interactive television entry, many players looking into expanding their video-on-demand, television commerce, Internet access, gaming and other interactive applications. Some predict interactive television will provide the exchange of millions of euros in goods and services via the television. Gemstar has the patents to technologies that would allegedly provide the gateway to this future income streams. Gemstar, focused on the programming guide as the springboard to interactive activities alleges that the electronic programming guide for a long time will be where the consumer moves to interactivity.

Gemstar by acquiring TV Guide of the US consolidated its hold on the electronic programming guide space. Gemstar owns the patent that allows viewers to record a TV show by inputting into the VCR a number listed in a television guide. The navigational devices in tomorrow's interactive TV will prove to be the next battle ground in IP in Europe, taken the vast market it covers. The guide not only lists shows to watch, but provides the gateway for consumers to order movies, record programs and purchase a pizza or other goods and services via a remote control.

When Macrovision acquired Gemstar, it anticipated synergies with another of its recent acquisitions: Mediabolic, a company whose technology enables interoperability of content on multiple devices in the networked digital home. Gemstar's EPG technology could be combined with Mediabolic to create tools for users to find, move, and play content on different devices on their home networks from one convenient user interface. This makes the EPG technology strategic to Macrovision's business on more than just an IP level.

As a result it seems logical that Gemstar will extend their aggressive IP approach to other EPG players in Europe.

EU Commission raid on Pharma companies

Yesterday, EU Commissioner Neelie Kroes launched an inquiry into the workings of the pharmaceutical industry, especially into patent-dispute settlements between companies including Pfizer Inc., AstraZeneca Plc and Johnson & Johnson, which companies offices were raided yesterday by Commission officials. The reasons for this raid were expounded in a press release:

“We have launched this inquiry because pharmaceuticals markets are not working as well as they might. Patent protection has never been stronger, but the number of new pharmaceuticals coming to market is declining. Patents can sometimes be invented around and will always expire eventually, but generic manufacturers are not jumping into the markets as quickly as we would expect.”

The probe will examine whether industry agreements infringe the EC Treaty’s prohibition on restrictive business practices, and whether companies have created “artificial barriers to innovative or generic product entry, through the misuse of patent rights, vexatious litigation or other means,” Kroes said.

Although this seems all new, it is not. Already in 2007 the industry has been the subject of scrutiny by national competition (antitrust) agencies, as well as by the EU Commission. The reason is well known. Pharmaceutical houses are becoming increasingly reliant on sales from blockbuster drugs--formulations that generate at least $1 billion a year in revenue. But sales of most drugs eventually decline because of patent expiration or competition from newer generic, treatments and drugs. The problem is that less new big selling drugs are in the pipeline. The arrival of cheaper generic variants pose a legal and political challenge for both the companies involved (research based as well as generic newbies) and the EU health authorities (and the competition agencies as a result thereof).

Like any humanly endeavor to extend life where possible, industry has long been seeking to develop policies to extend the life of their successful drugs, known as “life cycle management”. Those opposing or competing the research based pharmaceutical industry rather like to use a more derogatory term, “evergreening”. Those life cycle management policies have increasing come under scrutiny from competition authorities.

In 2005, the EU Commission found against AstraZeneca in an antitrust case brought by Generics (UK) Limited and Scandinavian Pharmaceuticals Generics AB (both part of Merck Generics). AZ adopted in that case a rather extreme interpretation of "marketing authorization date". The Commission found that AZ made misleading representations to national patent offices to (a) obtain supplementary protection certificates (patent extensions) that it would not otherwise have obtained, and (b) obtain supplementary protection certificates for longer periods than it would otherwise have obtained. Secondly, AZ was found to have switched the formulation of Losec from capsules to tablets to delay generic market entry and parallel trade. This was held to be an abuse of their dominant position.

The UK Office of Fair Trading (OFT) already investigated in 2006 claims that Novartis attempted to impede generic market entry in relation to Clozapine, a schizophrenia drug. Allegedly this was a strategy of keeping the market price up by supplying potential generic competitors, charging them a relatively high price so that they could not undercut as much as they might otherwise have done. Very little detail is publicly known and the Competition Commission eventually cleared Novartis, issuing only a very short decision giving little detail.

In 2007 the European Commission issued a Statement of Objections against Boehringer Ingelheim with regard to its patenting policy on anti-cholinergics (asthma drugs). Again, there is little information about this, but it is believed that BI were trying to create a “patent thicket” to protect the expiry of one of their major products.

Another examples exist of earlier scrutinies and on-going investigations by the European Commission in the pharmaceutical industry, but these are not public. They are based, in part, on allegations of over-aggressive assertion of patents. However both in the US and in Europe it is already established that it is an abuse of a dominant position to assert a patent when you have no belief in your prospects of winning, but it is still highly debatable whether the competition authorities and/or should become involved in an evaluation of strength of a patent case. In Netherlands this was held by the Dutch the Supreme Court in the case CFS Bakel vs. Stork Titan.

When the reason for the inquiry relates to the assertion of patents against generics, we find it highly debatable whether the competition authorities should become involved in an evaluation of strength of a patent case.

to be continued

New president Patent Division Düsseldorf Appeal Court

Judge Kühnen, the wel known patent judge in the reginal District court of Düsseldorf for patent litigation, has recently been appointed as the new chairman of the Patent Division at the Düsseldorf Appeal Court (Oberlandesgericht). He succeeds Judge Steinacker, who retires after many years as the chairman of the court.

The Düsseldorf courts for patent litigation are the most popular patent trial forums for patentees in Europe. Just the regional court has about 500 cases a year, which is more than anywhere else in Europe. It is not clear who will succeed Judge Kühnen as the chairman of the regional court in Düsseldorf, but there are strong indications that Judge Ulrike Voss will be the new District Court President. She already heads one of the two chambers for patent litigation at the regional court provisionally.

It would be a good thing if we would find an opportunity to have decisions by the main German patent courts available online as soon as they are handed down, and of course it would mean wider distribution if those could be provided in english as well. Hopefully sponsors can be found to make these patent decisions available online in english right after delivery. Who picks up the gloves?

American Presidential Elections and IP

Does it make a difference for IP who the next US president will be? Prof. Hal Wegner thinks it does.

On the Republican side, Mitt Romney has already made a statement in his campaign on key patent issues and has gained certain support in the patent bar; no "patent pulse" has been observed for Governor Huckabee or any other Republican candidate.

On the Democratic side, a stark contrast exists between Senators Clinton and Obama, while Senator Edwards has not shown a patent pulse. For details of the experience of the two Democratic Senators in patent law, see "Presidential Candidates’ Experience and Interest in Patents: Romney, Obama Tops".

For many months the need for the patent community to get involved with Presidential campaigns at an early stage has been stressed. Only with early involvement will a new President pick a patent-savvy Director instead of making the position a fungible political plum. As important, at least nine (9) of the twelve Federal Circuit judgeships are either currently senior-eligible or will be during the next four years: Getting solid Federal Circuit appointments should be an imperative for serious users of the patent system.

The criticisms voiced by me eralier are directed more at the collective leadership of the patent community that must get involved with all the presidential campaigns. [H]atchet job on poor Hillary". A Hillary defender asked me: "Why the hatchet job on poor Hillary when she’s down after Iowa? The Romney letter is no more than platitudes probably drafted by his PR folks, and only the last two paragraphs of the 9-page Obama campaign piece are directed to nebulous patent reform proposals. Your suggestions that Obama’s putative expertise was acquired by virtue of his tender age and osmosis while on the Chicago faculty are ludicrous."

In fact, it has only been in the past generation that patents have come to the fore: When Hillary was at Yale and in her years at the Rose Law Firm, there was very little interest in patents in the academy or in larger non-patent law firms. All that has changed, making Obama the intergenerational beneficiary. In fact, Obama did have serious interactions while at Chicago with faculty members interested I patents, far from being "ludicrous".

But, again, the point is not Hillary bashing but rather an encouragement that backers of candidates beyond Romney and Obama get involved with the various campaigns, at a time when meaningful input can be made. More on IP and the US Presidency, click here

Hal Wegner, Washington

2007 edition of Booz Allen's "Global Innovation 1000"

A little belated to report by blogger, but once again Booz Allen Hamilton published in December 2007 their “Global Innovation 1000” 2007 edition. Overall spending on research and development rose, to US$447 billion in 2007. The researchers found, as in 2006, no statistically significant connection between the amount of money a company spent on innovation and its financial performance. BAH selected a group of the Global Innovation 1000 companies, that spent a combined total of $68 billion on R&D in 2006. Through surveys and follow-up interviews with senior executives of those companies Booz Hamilton ex­plored their approaches to technology, customers, and markets, and how tightly their innovation strategies were connected to their overall corporate goals and direction.

Three innovation strategies are identified in the study, “Need Seekers”, “Market Readers” and “Technology Drivers”. However none of the strategies performed significantly better than the other. Customer focus is still the key. This year, nine of our 10 industry sectors accelerated their R&D spending — only the automotive industry spend grew at a slower rate over the last year than its five-year historic growth rate. More intriguing were the changes in the geographic distribution of R&D spending. Companies headquartered in North America increased their absolute R&D spending by 13 percent, accounting for most of the growth among the Global Innovation 1000. China and India continued to lag in intensity, with a spending level of only 0.8 percent of sales, reflecting the lower level of maturity in these markets and perhaps lower costs.

A great patent judge passes away

As blogger just learned, on Christmas Eve, one of Europe's great patent judges, Lord Justice Pumfrey, passed away quite unexpectedly at the much too young an age of 56. He was the author of many judgements that changed the patent landscape in the last years, not just for the UK but for many European patent professionals, who followed his learnings closely. He was admired and respected and we surely feel deeply sorry that we have to miss a great judge.

see also Times Online, Jan. 3

Patent Trolls Statistics, will Europe escape the trolls?

Patent Troll Tracker tracks patent litigation. Read their year end’s "rundown on some numbers concerning patent litigation". The Troll Tracker looks at the Fortune 100 (top 100 US companies in terms of revenues) to see who got sued the most for patent infringement, and found that the top 35 companies were sued a combined 500 times for patent infringement in the last two years alone. TechDirt refers to this amount as “an awful lot of money wasted on lawyers that could be going towards actual innovation”. However, I wish there is a clear 1-to-1 relationship between patents and innovation. Intuitively we think of innovation unthinkable without patents. However, history has shown that innovation is achieved in areas where patents are rare or seldom used.

Patent Troll Tracker uses the term “non-practicing entities” or NPEs defined as “entities that don't make any products”. PTT asserts that of the lawsuits over the past two years, approximately 50% came from NPE’s. However, in the last 3 months, according to PTT, “that number shoots up to 70% from companies that don't make products. And if you limit the list to tech companies, 80% of the lawsuits came from companies that don't make products”.

TechDirt wonders: “shouldn't this be ringing some alarm bells?” We have a similar contemplation: Will 2008 bring the same troll trend in Europe? We already reported a few times on Sisvel, Europe’s largest patent troll. However, the American companies that focus on patents, whether they qualify as a NPE, such as Gemstar, the newly acquired patent troll of Macrovision, may use 2008 to assert their patents in Europe based on the use of various electronic programming guides. 2008 also show an increase in NPE patent assertion activity in Europe, no doubt. Would be interesting to see if anyone in Europe, like PTT, can do some research on this.