What opportunities and risks come with the new Top Level Domains (TLDs)?

When ICANN (Internet Corporation for Assigned Names and Numbers) launched the new TLD Program, the purpose was to stimulate innovation and competition in the domain- and Internet industry and to give the possibility to own and run a top level domain.

ICANN received over 1900 applications for 1400 new top level domains. A total of 575 of them was from trademark holders applying to register their trademark as a suffix. Out of these, 77 applications used city names or other geographical connections. Another 107 applied for new suffixes under different, non-Latin, languages. A total of 561 generic words have, or will, become new top level domains.

Up until today, 583 of these new top level domains have been activated and are now in a phase referred to as ‘General Availability’. A total of 27,593, 028 names have been registered.

In a world where digitisation is constantly accelerating, these new endings provide both opportunities and potential risks. By using a classic SWOT-analysis, we can point out the pros and cons.

A strength is to offer accessibility and a communicatively strong name.

Today you can’t find any available two to five letter combinations under .com and we are running out of six letter combinations as well. The prices for short, one-word .com domains in the aftermarket are increasing. It makes sense to consider travel.agency instead of travelagency.com when the price tag is $3’000 as opposed to $300’000.

The fastest growing Internet markets are not in the west. Some of the new domain extensions offer people the option to use their native language. According to www.nTLDstats.com 42% of all registrations of new domain extensions are made in China. Only 10% come from the U.S. Being able to communicate and trading online using non-Latin keyboard will become increasingly common as the Internet usage is increasing around the world.

The general awareness is still low, which is a weakness.

We are still in the early stages of new domain extensions and no one knows which role they will end up playing in the domain name eco system. They are late comers to a well-established market where the .com still is king and the first choice for any company looking globally. We don’t know if the new domain extensions will be able to compete on the same level with .com in the future. Next generation will not only know the answer, they will create it.

Shorter is better when it comes to domain names and the new domain extensions index as good as .com with Google.

A clear trend in the aftermarket is that with more opportunities and greater accessibility the market looks for shorter names under the new extensions and the value for long, i.e. three words .com domain names is decreasing. It is already proven that new TLDs are indexed just as well as the older top level domains such as .com and .net. Therefore, it is also natural that the shorter and more descriptive domain names are more attractive than long and complicated multi-word domains.

In the 90’s and early 00’s, some people still questioned whether it was economically viable to register keyword domain names under .com due to the uncertainty of usage.  Today we know better and with the knowledge of how Google index the new domain extensions, and the fact that Google themselves have applied for 101 top level domains, makes them a good complement to the current domain portfolio.

Trademark infringements and fraud/phishing attacks are considered threats.

Although trademark infringements in the domain name industry is not a new issue, domain names are to be considered and handled as very important intellectual properties due to the risk of infringements.

As with the .com, and other established domain extensions, we see typo registrations and/or direct infringements of trademarks used in attempted fraud and phishing attacks.

The problem is not under any specific extension. However, the people behind the attacks use the extensions in the same way in which they are intended to be used. This means that we see more economic related fraud and phishing attacks from finance related extensions and more security breach attempts from support/tech extensions.

ICANN has tried to be proactive around these issues by establishing Trademark Clearing House for trademark holders and complemented the UDRP (Uniform Domain Name Resolution Policy) with a ‘Fast Track’ called URS. It is still an issue which can, and should, be monetised.

In summary, the new domain extensions provide excellent opportunities to improve and develop the digital marketing and digital presence of businesses, but it also requires proactivity and action.

Marcus Glaad, Dotkeeper AB

Broad Institute maintains patents to Gene Scissors in the US

The CRISPR-Cas9 technology, the so called “gene scissors” which allow for targeted genome-editing, is subject to a patent dispute between two research teams lead by Jennifer Doudna at UC Berkeley and Emanuelle Charpentier then at the University of Vienna on one hand, and Feng Zhang’s lab at the Broad Institute and MIT on the other. At stake are the fundamental rights to the CRISPR technology, which may very well be the greatest, and most profitable, advance in biotechnology of this decade.

The battle has taken an unexpected turn in the US, where the Patent Trial and Appeals Board (the PTAB) of the USPTO on the 15th of February 2017 issued their decision stating that there is no interference-in-fact between several patents and patent applications owned by the Broad Institute and applications owned by UC Berkeley. In the decision, PTAB writes that Broad has persuaded us that the parties claim patentably distinct subject matter” and “Broad provided sufficient evidence to show that its claims, which are all limited to CRISPR-Cas9 systems in a eukaryotic environment, are not drawn to the same invention as UC’s claims, which are all directed to CRISPR-Cas9 systems not restricted to any environment.” Thus, the PTAB decided in Broad’s favor. The decision neither cancels nor finally refuses either parties’ claims and therefore both parties are allowed to freely license and assert their right to any third party.

The background of the dispute is that the Broad Institute has received 13 patents on different aspects of the CRISPR technology since 2014, but the UC Berkeley team believes that they alone deserve patent rights to some core technology based on their earlier work.

UC Berkeley filed their first patent application on March 15, 2013 claiming priority from May 2012. They described genetically modified cells that produce the Cas9-enzyme, which is required for working the CRISPR technology, and the use of CRISPR-Cas9 in any setting and cell type.

In October 2013 the Broad team filed their patent application claiming priority from December 2012. The application described adaptations of the CRISPR technology to eukaryotic cells. Broad team requested accelerated examination which resulted in that they obtained 13 granted patents, including the original CRISPR patent, with claims to (very profitable) eukaryotic applications of the technology, even though the UC Berkeley team having earlier date of invention and earlier filing date still has not received any granted patent rights.

UC Berkeley attempted to speed up the prosecution proceedings before the USPTO and finally resorted to intentionally amending the claims in their application in order to achieve an overlap between the claim scope of their earlier filed application and Broad’s granted patents and pending applications. This in turn resulted in the instigation of Interference proceedings before the USPTO in order to determine which team was first to invent the revolutionary technology and thus had the right to obtain patent protection. 

On the 6th of December 2016, long after filing the written arguments, both parties were allowed about 40 minutes to orally present their arguments. Broad argued that the adaptation of the technology to eukaryotic cells was an invention in itself, while the UC Berkeley team held that Zhang’s adaptation of the technology to eukaryote systems was obvious and could have been done by a person skilled in the art of biotechnology based on the work of Doudna and Charpentier.

After almost two (long) months of waiting, the PTAB has now issued their decision meaning that Broad’s patents are not hindered by the UC Berkeley application.

The UC Berkeley team maintains that the Broad Institute’s patents are not patentably distinct from Doudna’s and Charpentier’s invention and have issued a statement that they are considering all options for possible next steps in this legal process, including the possibility of an appeal of the PTAB’s decision.

Joanna ApplequistPatent Attorney

New UK intellectual property minister reaffirms UK commitment to the Unified Patent Court

There is a new sheriff in town. Jo Jonson takes over from Baroness Neville Rolfe as UK Intellectual Property minister. He was appointed new minister on 11 January.

Baroness Neville Rolfe has previously made some promising statements concerning the UK’s intentions to ratify the agreement on a unified patent court (UPC).

Jo Johnson has now reaffirmed the country’s commitment to the unitary patent project and its importance to British business in a House of Commons Science and Technology Committee session on 11 January. He did also warn that the future of the ratification beyond Brexit is dependent on future negotiations.

Jo Johnson stated: “We have taken a decision to proceed with preparations to ratify the UPC Agreement. We believe it is important that we participate in this framework. It has value to UK inventors and businesses and we want to be there at its creation.”

The UK should be able to participate in the unitary patent system because the UPC will not be an institution of the EU. But this only goes so far since the unified patent agreement repeatedly refers to EU law and the EU court of justice.

If and how the UK can stay in the UPC after Brexit is still an ongoing debate and we will just have to wait and see where it goes.

BEPS from an IP perspective

Part 1 – Introduction to BEPS for IP professionals

The focus on IP related issues is becoming increasingly more relevant as our economy is changing to become more digital and knowledge based. More are realising the potential of their intangibles and what commercial gains can be won if managed properly. The possible threats and costly consequences if ignored are also becoming evident in both large and small companies. A contributing factor to the latter is how IP is becoming a main character in the world of TAX through Base Erosion and Profit Shifting (BEPS).

BEPS is a practice enabled by, among other things, discrepancies in tax laws combined with aggressive tax planning by MNEs. The result is double non-taxation and reduced tax rates. The Practice is affecting development rates as it reduces tax revenues for certain countries.

The BEPS project is an effort to keep up with the dynamic market and knowledge base economy by the Organisation for Economic Co-operation and Development (OECD) countries. The result is a set of guiding action plans with different ways to tackle the problem of BEPS. Out of the 15 actions, action 8-10 of the report deal with Transfer Pricing (TP) and intangibles. More information about the different actions can be found here http://www.oecd.org/ctp/beps-actions.htm

Transfer Pricing is how goods and services are priced when they occur within an MNE group. An intra group transaction should be treated according to the arm’s length principle. The problem of adopting this principle when it comes to intangibles is the difficulty to define intangibles and how and when they are transferred. The previous guidelines have put an emphasis on legal ownership of intangible assets and this has resulted in the possibility to artificially shift profits through contractual arrangements like remuneration schemes and royalties.

In the new guidelines a mere legal ownership will not, on its own, justify any returns. The profits rendered from intangibles should rather be allocated based on what value contribution functions a group member and what risk they take in relation to the intangible asset and the transaction. The definition of intangibles is also broadened and a guide of how to deal with Hard to Value Intangibles (HTVI) has also been included.

The guidelines aim to improve the understanding on intangible assets and how they should be considered for the purpose of determining the correct pricing method and under what conditions the transaction occurs. For any large MNE the work in untangling these relationships will be vast and from an IP perspective several questions arise:

  • What are the main difficulties MNEs will experience as they start to unravel their IP ownership structures?
  • What resources and systems must be implemented in order to cope with the demand of clearly articulating their IP, rights to IP and how it is transferred?
  • The identification of risk assumption in relation to IP will be different in regard to what value contributing functions are undertaken, how is this practically operable when the understanding of IP is limited in the group?

Although there is a large risk of making errors when transfer pricing and aligning business and operations to the new BEPS regulations, there is also a lot to be gained in improving one’s understanding and controlling of IP.

AWA Strategy will release a series of blog posts addressing these issues, commencing with action 8-10 as the work to implement changes in alignment with the new guidelines is only just beginning.

Annelie Viksten, IP Strategy Associate, AWA Strategy

UK inches towards UPC ratification

There was a sigh of relief at the end of November when the UK announced that it would proceed with the ratification process to implement the UPC in spite of Brexit.  This renewed the hope that the UPC will come in to force in 2017 as planned.  Whilst this was good news, what did it actually mean for the timescales and where is the UK currently in its legislative process to ratify the UPC?

In order to look forwards, it may be helpful to take a look back to see what the UK has already done to ratify the UPC.  They were, in fact, fairly advanced in the ratification process before the result of the EU referendum put a spanner in the works.

In May 2014, the UK Parliament passed the Intellectual Property Act 2014.  This Act amended the Patents Act 1977 by inserting new sections 88A and 88B in order to introduce the concept of the UPC into the legislation.  These new sections provided that the Secretary of State may make orders to give effect to the UPC Agreement and that such orders must be presented to both Houses of Parliament (the House of Commons and the House of Lords) for approval before they are passed. The UPC was also designated as an “International Organisation” under UK law which allows it to be granted certain privileges, immunities and exemptions if required.

Following on from this Act, the Patents (European Patent with Unitary Effect and Unified Patent Court) Order 2016 was laid before Parliament in March 2016.  This order makes various amendments to the Patents Act 1977 in order to clarify the difference between a unitary patent and a European patent and applies and disapplies various provisions of the Patents Act 1977 (as appropriate) to unitary patents.  It is worth noting that this order was debated in the Houses of Parliament in March when confidence was still fairly high that the UK would remain in the EU.  Hansard (the record of parliamentary debates) shows that the House of Commons approved it in just 16 minutes and the House of Lords took only 24 minutes!

Since the UK’s announcement that it will continue to ratify the UPC Agreement, it has shown some progress by signing the Protocol on the Privileges and Immunities of the Unified Patent Court on 14 December 2016.  However, in order to implement this Protocol in the UK, it will need to lay a further order before Parliament for approval.  This order is currently being drafted but no draft has been published and there is no news on when it will be laid before Parliament.  I think what we can expect, when the time comes for the parliamentary debate, is that it will definitely not be as brief as it was for the last order.  What should be a fairly straight forward procedural approval may turn into a wider discussion on the UK’s role in the UPC, how it can function once the UK leaves the EU and whether the ratification should continue.

The UK also needs to deposit its instrument of ratification of the UPC Agreement with the General Secretariat of the Council of the European Union in order to formally ratify.  This will be prepared by the Foreign and Commonwealth Office but should be merely a formal step which will be done once the relevant secondary legislation has been passed.

There is still a lot of uncertainty surrounding Brexit, particularly with the ongoing Supreme Court appeal as to whether Parliament should be consulted before Article 50 is triggered.  The judgement is due this month and may give some clarity on the timing for Article 50.  As the UK is progressing with ratification of the UPC, membership is now likely to be one of the points of negotiation on departure from the EU.

Alicia Kim, Associate