Archive | 2016, June | (8) posts

Has China taken another Bite out of the Apple?

After locking horns with a local Chinese company for six years over the IPHONE trademark, Apple took a drubbing after last month’s decision by the Beijing High People’s Court.

Apple applied for the “IPHONE” trademark for software and hardware (Class 9) in China in 2002. A Chinese company, called Xingtong Tiandi, which makes leather goods, is the owner of the suit mark “IPHONE’, which was filed in 2007, the same year Apple’s first Smartphone, the iPhone, was sold. The brouhaha began in 2010 when the US giant opposed Xingtong Tiandi’s trademark.  The appeal was dismissed by the Beijing Court on 31st March stating that Apple was unable to prove that its “IPHONE” mark was well known in China before 2007 when it first sold its smartphones.

After being dealt a series of unsuccessful outcomes; Apple was unlucky at the opposition, the opposition review, the appeal at the Beijing Intermediate People’s Court and finally the appeal at the Beijing High People’s Court. Apple has stated that it plans to vigorously protect its intellectual property rights by requesting a retrial by the Supreme Court.

The Beijing High People’s Court made specific reference to the fact that Apple’s iPhone was released in June 2007, and sold on the Mainland China in October 2009.  The evidence filed by Apple was predominantly after the application date of the suit mark, i.e. 29 September 2007. The Court found that Apple was unable to establish that its iPhone trademark was well known before that application date.

This is another case demonstrating the difficulty that brand owners face in the fight against trademark squatters, in the absence of registered trademark rights in China.  If the brand owners have to rely on the ‘well-known mark’ ground, the odds are stacked against them unless they have been on the ground in Mainland China for a significant period, before the relevant time.   So, the cardinal lesson/key takeaway for brand owners is to register the trademark for the goods that you need protection for in China at the earliest possible time.  It is expensive and time consuming to deal with a preemptive application, not to mention the negative publicity that inevitably arises out of a legal throw-down.

A degree of bewilderment seems to underlie some reports, especially the non-Chinese ones, on the decision that iPhone is not a well-known trademark in China.  The decision has made it clear that the relevant point of time in determining the well-known mark status is the application date of the suit mark. It is irrelevant as to how famous iPhone is nowadays or at the time of the hearing of the court of appeal.  Though without the benefit of knowing what the evidence consisted of, it is not difficult to imagine how onerous it would be to produce the required evidence of use and reputation in China before 29 September 2007.

Another point to note is that in the appeal to the Beijing Higher People’s Court, Apple claimed an additional ground, which provides for the invalidation of trademarks that are, for example, registered by deception or other improper means.   The Court did not consider this ground because it was never raised in the first instance appeal and the opposition review, and the Court did not comment on the applicability of the ground.  If Apple has some prospect of success by availing of this reasoning, it is curious as to why this was not pleaded in previous proceedings.

Apple was reported to plan to seek a retrial by the Supreme People’s Court and to continue to vigorously protect its trademark rights.  It will be interesting to see if the Supreme Court decides differently.

Ai-Leen Lim, CEO and Principal Counsel, AWA Asia

What does Brexit mean for the EUTM system?

The people of the United Kingdom have spoken: They do not wish to be part of the EU any longer. It will now take time, probably years, before we know the terms of the divorce between the UK and the EU. Having said that, what impact of Brexit do we foresee for trademark owners?

Short-term EUTM registrations are still valid in the UK. Keep in mind that the referendum has voted for Brexit, but the UK is actually yet to request for an exit, which might not happen until the autumn. This means that no short-term action is required and EUTM registrations remain valid in the UK.

Once Brexit is a fact, does it mean that the trademark protection in the UK will be lost by EUTM proprietors?

For existing EUTM registrations the answer is probably no. The expected solution is that a transitional period is set up where EUTM owners can extend/convert their EUTM registration to national UK registrations (this will likely include payment of official fees).

For new EUTM registrations the answer is that the UK will no longer be covered by EUTM and a separate application in the UK will therefore need to be filed. Today’s official fee to add the UK to an International/Madrid registration is only CFR 262 for the first class and CFR 73 for each additional class. In other words, it is not massively expensive.

From a prosecution perspective the changes will likely only be administrative and mean two applications with a little higher cost. From other perspectives we see the following three issues:

  1. Injunctions based on EUTM registrations normally cover the entire EU. Post-brexit the courts in the UK will no longer be able to issue pan-EU injunction, and vice versa court injunction in other EU member states will not cover the UK. This will increase the cost of litigation since two sets of litigation will be required.
  2. Today it is sufficient to use a EUTM registration in the UK to maintain it in the entire EU. Post-brexit EUTM proprietors, who rely on their EUTM in the UK, will need to revise their filing strategy.
  3. The case law of the Court of Justice of the EU will no longer be directly applicable in the UK, which probably will lead to differences in jurisprudence between the EU and UK. This will be important for brand owners to keep track of.

Overall our initial position is that there is no need for drastic actions with regard to the Brexit referendum. We will of course keep reverting to this subject until the dust has settled and the picture is more clear.

Kristian Martinsson, Attorney at Law 

Effects of UK leaving the EU on the Unitary Patent and the UPC

The result of the EU referendum held on 23 June was that the UK decided to leave the EU (European Union). As we have written previously the process of leaving the EU is long and can even take up to a couple of years.

The UK will have to negotiate with the EU and the remaining member states regarding several issues, and until the UK is finally ready to leave, nothing is expected to change.

It is for instance expected that the UK will stay within the European Patent Convention, since the EPO is not an EU institution, and thus be available for national validations for years to come. British European Patent Attorneys holding a certificate to litigate before the UPC will most likely still be allowed to do so.

In general terms no IP rights, including trademarks and designs in the UK will be lost, even though some might have to go through transitional actions when the UK finally leaves the EU.

What will happen to the Unitary patent package, including the UPC, is more difficult to predict. It is likely that the process will be delayed, and that the entry into force cannot take place in the beginning of 2017. Some voices have been heard that the UK might still be inclined to ratify the agreement during the negotiation period, as they are still a part of the EU until that period ends, meaning that the UPC can be up and running while the UK is still in the EU. If that happens, the UPC might very well be on its way during 2017. The UPC is also an international agreement, leaving some room for (Art 24(2)(2) UPCA) the UK to stay within the UPC, and have jurisdiction over traditional European patents, if they ratify before the end of the negotiation period ends and if proper amendments to the UPCA are made.

As one of the locations of the court is set to be in London, the UPC agreement will either have to be amended to relocate the court, or the seat will still be in London even though this court would have no jurisdiction over patents in UK and neither would UK nationals be able to sit as judges in the Court. None of these options is very attractive, and it is possible that keeping the Court in London will violate EU law. The UPCA will thus have to be amended, and a new location would likely be Milan in Italy or The Hague in the Netherlands.

One major concern is that the value of the Unitary patent will be diminished if the UK is not one of the countries in which the unitary patent can be obtained, and subsequently litigated in a unified manner. The UPC will then lose some of its attractiveness, since UK nationally validated patents will have to be nationally litigated and enforced. On the other hand, patent holders might be less inclined to opt out of the UPC since the UK designation would not be able to be attacked in the UPC.

It is also foreseen that the language regime will remain unchanged, i.e. the three languages English, French and German will still be used as stipulated by the Unitary patent regulation and the UPC.

Once the gun smoke has settled in the UK, we will know if they intend to ratify or not, and the time schedule for the UPC will be settled.

Sofia Willquist, European Patent Attorney

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Candy co-operation turns into candy competition

Kraft Foods Sverige IP AB recently won over Mars Inc. and their Swedish subsidiary Mars Sverige AB in a trademark matter before Svea Court of Appeal in Stockholm.

Mars started using the trademark “m&m’s” in 1941. Shortly after that Mars entered into a co-operation with Marabou/Freia A/S (later acquired by Kraft). This co-operation resulted in the development of a product, peanut covered in milk chocolate and sugar coated, that Marabou (Kraft) started selling in Sweden under the trademark “m” in 1957.

The co-operation concerned exchange of information and know-how and was formalized in a written agreement between the parties in 1989. In this agreement Mars undertook not to sell “m&m’s” in Sweden, Norway or Finland and Kraft undertook not to sell their “m”-product on markets outside of those countries.

M&M vs m

However, Mars started selling the product “m&m’s” on the Swedish market in 2009.

Kraft presently holds two registrations for the trademark “m” (device) in Sweden dating back to 2005 and 2009. In addition, they claim a right to the trademark acquired through user on the Swedish market, dating back to at least 1996. In a previous court matter between the parties, this reputation was found to be a prior right to a now cancelled Swedish trademark registration for “m&m’s”.

The present decision, however, concerns a request from Kraft to prohibit the use of “m&m’s” in Sweden. The Court of Appeal found that Kraft held an unregistered right to the trademark “m” in 2009, before Mars started using “m&m’s” in Sweden. Market surveys showed brand recognition of around 80% and the annual sales were around 200 tons.

The court held that Mars had provided evidence to the fact that “m&m’s” was considered a well known trademark on the Swedish market in 2014 and that the Swedish consumers could correctly identify the commercial source of origin. 88% could identify Mars as origin for “m&m’s” whereas only 31% could identify “m” to Kraft, Marabou or candy. However, the court was not convinced that this was the case in 2009, the relevant point of time, since sufficient evidence was not shown to this effect.

The decision of the court results in a prohibition for Mars to use the trademarks “m” or “m&m’s” in Sweden for candy in penalty for a fine of SEK 2.000.000. In addition, Mars should compensate Kraft for their court costs.

Kristina Fredlund, European Trademark Attorney

Games – A house of IP?

For the second consecutive year Awapatent attended the Nordic Game Conference (NGC). The conference was held at Slagthuset in Malmö, during May 18-20 2016. NGC is one of the largest video game industry exhibitions in Europe with a heavy focus on business and networking.

The video game industry is growing rapidly. Nowadays gaming is casual and almost everyone is a gamer, primarily thanks to smart phones. A game can vary in form, from a charming simplistic puzzle game on a phone to a bombastic cinematic first person shooter on a monster PC. A game can be made by a single developer but also by a thousand-person team. When the game culture transfers from a small sub-culture to something as self-explanatory as movies and literature there will be opportunities.

Games challenge the traditional ways to solve IP problems. Games are interactive, and differ from traditional narrative entertainment. Games are a high-tech product, created from cutting-edge digital technology, but ending up as an entertaining experience to the end user. A game represents thousand of person-hours invested in the development, and these person-hours represent innovation in even minute details.

Games are houses of IP, and by this I mean that IP constitutes the bricks and logs of games. To protect an investment worth thousands of person-hours, IP may be a fundamental key to commercialization and in the end, profiting on a game development project.

Game content as a whole is primarily protected by copyright. A game is built on programming code and is therefore by all means a computer program. But both the purpose and the user interface of a game differ from a traditional computer program. Different important copyright rules may be applicable on computer programs, which may not be applicable on other categories of works, and vice versa. An example of the latter is the InfoSoc directive (directive 2001/29/EC), the directive regulating copyright in the information society, which expressly is not applicable on computer programs. The applicability of article 6 (the right to technological measures) on video games was the main issue in the ECJ case C-355/12 Nintendo. The court stated that the video game in question could not be solely reduced to a bearing programming code but has unique creative value and therefore the InfoSoc directive was applicable in lieu of the Computer program protection directive (directive 2009/24/EC).

According to my own opinion, every game has to be individually assessed, and this shows the complexity of games and copyright. We all agree on that video games are copyrighted works, but the interesting question is rather how video games are copyrighted works.

Viktor Johansson, Associate

AWA Asia likes Facebook’s victory in China

In a recent high profile case, Facebook secured a victory against a trademark squatter at the Beijing High People’s Court. This comes shortly after Apple Inc was defeated in its iPhone trademark battle.

In 2011 a Chinese individual, who is alleged to be associated with a local beverage company, applied to register the trademark FACE BOOK for various food and drink products in Classes 29, 30 and 32. Facebook opposed the applications in 2012. The oppositions and subsequent opposition reviews were unsuccessful. Facebook appealed to the Beijing Intermediate People’s Court and won. The Trademark Review and Adjudication Board were ordered to reissue the opposition review decisions. The applicant appealed to the Beijing High People’s Court, which affirmed the first instance court judgment.

The High People’s Court ruled that the suit mark FACE BOOK should not be registered. The court, relying on Article 41(1) of the then Trademark Law (Article 44(1) of the current Trademark Law), which allows for the invalidation of trademarks that are registered by deception or other improper means, endorsed the use of the provision in disallowing the registration of the applied-for trademarks.. In this case, the impropriety of the applicant was supported by the fact that he had applied for several FACE BOOK marks and had a couple of other marks such as the Chinese mark for the toothpaste brand ‘Darlie’. The court held that the applicant clearly intended to duplicate and copy other famous marks and such behaviour would disrupt the normal trademark registration management system, undermine fair competition and violate the principles of good public order and custom, which the above provision served to protect.

On the basis of what was said in the judgment, it appears that the court’s decision hinged upon the applicant’s applications for other famous trademarks. The judgment does not expressly state that FACEBOOK was famous, although Facebook alleged and seemed to produce considerable evidence to prove the same. The court also stated that activities where a person applies for a large number of famous trademarks belonging to others in order to squat on the trademarks and try to attain benefits by way of assigning the trademarks should be stopped. The judgment did not enumerate all the famous trademarks that the applicant squatted on and it did not set out the specific pieces of evidence the court relied on to reach its decision. The trademark database of the Chinese Trademark Office indicated that the applicant had no more than 20 trademarks and it is uncertain if all of those were famous trademarks belonging to others. It is unclear from the judgment whether there is a threshold in respect of the number of squatted trademarks and, if so, how many. It is also unclear whether evidence showing attempts made by the squatter to sell the marks is essential. Therefore, while it is not at variance with the law and practice to disallow a trademark application on the basis of Article 41(1), it might be premature to be too hopeful that more reliance will be put on the provision. Time will tell whether bad faith applications will in future be more stringently dealt with under Article 41(1) by the administrative authorities and the courts.

This judgment is in stark contrast to the blow dealt to Apple about a month before. Apple strived to achieve the same outcome as Facebook (i.e., to prevent the registration of a hijacked mark) but both companies were unable to convince the court that their marks were well-known in China at that time. However, unlike Facebook, Apple was unable to rely on Article 41(1) because it had not pleaded that ground in the previous procedures.

Ai-Leen Lim, CEO and Principal Counsel, AWA Asia

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Prepare your strategy for the Unitary Patent and the UPC – (Part III)

Strategies for pending patent applications and important aspects of the opt out procedure

When preparing for the entry into force of the new Patent system in Europe, also patent application which are now currently pending before the European Patent Organization (EPO) must be considered. A decision must be made whether to try to delay the proceedings to be able to request a European Patent with Unitary effect or to proceed to a granted European patent before this date. Of course, a pending patent application which is not foreseen to be granted before the entry into force, and which is not meant to be within the competence of the Unified Patent Court (UPC), may also be opted out, starting during the sunrise period.

Delaying the proceedings with the EPO can be done by requesting extensions of time limits, or if that’s no longer an option, by filing divisional applications. The filing of divisional applications, having slightly different scope of protection, could also be an important strategy for those applicants who wish to have it both ways, i.e. request Unitary Patent and have the patent validated nationally as today.

This means that both applicants and proprietors will have to consider the possibility of requesting opt out from the UPC, even before the Court opens. A strategy should be developed for the patent portfolio, at the latest during the fall of 2016, to be able to quickly file any such requests when the Registry of the UPC opens up. The request for opt out can be withdrawn, at any time unless national litigation proceedings have begun, but you may only request opt out and withdraw the request one time.

Requesting opt out might seem as an easy administrative task, especially since it is done online in the Case Management System of the UPC, and is not envisaged to incur any fees. However, the proprietor must keep in mind that it is only the entitled proprietor and all entitled proprietors that may file the request. Keeping track of who is the entitled proprietor in different states, is therefore essential, especially if you have multiple or different proprietors for your patents.

Sofia Willquist, European Patent Attorney

Prepare your strategy for the Unitary Patent and the UPC – (Part II)

The language regime for the Unitary Patent and the divisions of the UPC

As we have written before the creation and start of the Unified Patent Court will change the mindset of patent litigation in Europe fundamentally. However, Europe is a diverse continent, not the least when it comes to languages. With the European Patent Office (EPO), French, German and English have since long been established as language of proceedings, i.e. the language which the patent will be granted in. The language regime for the Unitary Patent should now also be considered. Within 1 month of the publication of the mention of grant the request for the Patent with Unitary effect must be filed.

If your patent is granted in English, a translation of the entire specification into any of the languages of the Contracting member states must also be filed at this time. If the patent is granted in French or German the translation must instead be filed in English. This translation should be man-made during a transitional period of 7 years, after which period this translation requirement will probably be abolished. The cost of preparing a translation should therefore be considered. As general advice, if the patent was originally filed in e.g. Danish, this text could be used for the translation. Otherwise if the text is only in English, a translation into German or French is probably the best alternative, as the patent claims will still have to be translated for the purpose of grant.

The language regime of the Unified Patent Court is also an important aspect, as for instance any actions for revocation must be filed in the language in which the patent was granted, and the claim must be filed with the central division of the Court. This means that if the patent was granted in German, a revocation action must be filed in German, even though it is filed with the Central Division in Paris or London. Infringement actions may be filed in the language of the specific division where the claim is filed. Hence, an infringement action filed with the Nordic Baltic regional division in Stockholm must be filed in English. Setting a strategy for the language of proceedings with the EPO (i.e. English, German or French) must be thus be done now, before filing any new patent applications.

Sofia Willquist, European Patent Attorney