Marks & Spencer wins latest battle in ‘war’ of roses against Interflora The evidence is comprised of survey responses from 13 Inter- flora customers who had encountered the Marks & Spencer- sponsored link while searching for Interflora products online. The 13 responses were selected from a wider body of survey material because they seemed to suggest brand confusion caused by the Marks & Spencer marketing ploy. When Marks & Spencer first challenged the use of such evidence, in 2012, it was successful, but in February, the High Court decided to permit the use of the specific evi- dence that Interflora put forward. In the latest decision, Lewison was adamant that the survey evidence should not be let in to proceedings in support of Interflora’s case. readmore p3 LONDON 15.04.2013 Marks & Spencer has won its latest dispute with In- terflora in what the presiding judge described as their ongoing “war of attrition” over Google AdWords. The two companies have been at odds since 2008 when UK retailer Marks & Spencer first paid to make its floristry services visible as a sponsored link whenever Google browsers entered the search term ‘Interflora’. In the latest decision, which was handed down on 5 April, Lord Justice Kim Lewison in the Court of Appeal of England and Wales ruled that survey material col- lected by Interflora and admitted as evidence by the High Court of Justice is in fact not sufficiently “valu- able” to be used in the main case’s long-awaited trial later this month. India joins international trademark system Trademark filers seeking to protect their brands in India will be able to do so under the Madrid System from 8 July. readmore p4 Latest news Aereo prevails but one judge calls the service a “sham” p6 Latest news Twitter removes links to Prince music videos from new Vine platform p7 Latest news Fox and Universal Studios ask Google to take down takedowns p7 Latest news US cracks down on counterfeiting in California and Washington p8 Country insight Haiying Fu of King & Wood Mallesons discusses taking on Chinese counterfeiters through search engines p10 Patent litigation No one survey method has emerged as top dog in the current climate, say Gabriel and Betsy Gelb p11 People moves Lanny Breuer moves to Covington & Burling, Olswang names new CEO, and more p15 USPTO issues iPad Mini apology After requesting that Apple clarify its trademark application for the term ‘iPad Mini’, the USPTO has withdrawn a number of its objections and issued an apology. readmore p3 IPPro IN BRIEF Pro IP THEINTERNET ipprotheinternet.com ISSUE014 16.04.2013 TUESDAY
Transcript
IFW ADVERT 203 x 40.indd 1 28/03/13 1:44 PM
Marks & Spencer wins latest battle in ‘war’ of roses against Interflora
The evidence is comprised of survey responses from 13 Inter-flora customers who had encountered the Marks & Spencer-sponsored link while searching for Interflora products online.
The 13 responses were selected from a wider body of survey material because they seemed to suggest brand confusion caused by the Marks & Spencer marketing ploy.
When Marks & Spencer first challenged the use of such evidence, in 2012, it was successful, but in February, the High Court decided to permit the use of the specific evi-dence that Interflora put forward.
In the latest decision, Lewison was adamant that the survey evidence should not be let in to proceedings in support of Interflora’s case.
readmore p3
LONDON 15.04.2013
Marks & Spencer has won its latest dispute with In-terflora in what the presiding judge described as their ongoing “war of attrition” over Google AdWords.
The two companies have been at odds since 2008 when UK retailer Marks & Spencer first paid to make its floristry services visible as a sponsored link whenever Google browsers entered the search term ‘Interflora’.
In the latest decision, which was handed down on 5 April, Lord Justice Kim Lewison in the Court of Appeal of England and Wales ruled that survey material col-lected by Interflora and admitted as evidence by the High Court of Justice is in fact not sufficiently “valu-able” to be used in the main case’s long-awaited trial later this month.
India joins international trademark system
Trademark filers seeking to protect their brands in India will be able to do so under the Madrid System from 8 July.
readmore p4
Latest newsAereo prevails but one judge calls the service a “sham”
p6Latest newsTwitter removes links to Prince music videos from new Vine platform p7Latest newsFox and Universal Studios ask Google to take down takedowns
p7Latest newsUS cracks down on counterfeiting in California and Washington p8Country insightHaiying Fu of King & Wood Mallesons discusses taking on Chinese counterfeiters through search engines
p10Patent litigationNo one survey method has emerged as top dog in the current climate, say Gabriel and Betsy Gelb
p11People movesLanny Breuer moves to Covington & Burling, Olswang names new CEO, and more
p15
USPTO issues iPad Mini apology
After requesting that Apple clarify its trademark application for the term ‘iPad Mini’, the USPTO has withdrawn a number of its objections and issued an apology.
readmore p3
IPProINBRIEF
Pr oIPTHEINTERNETi p p r o t h e i n t e r n e t . c o m
Marks & Spencer wins latest battle in ‘war’ of roses against InterfloraContinued from page 1
“Perhaps I did not make my message clear enough in Interflora I [the 2012 decision]. Let me say it again, but more loudly.”
“A judge should not let in evidence of this kind unless the party seeking to call that evidence satisfies him (a) that it is likely to be of REAL value; and (b) that the likely value of the evi-dence justifies the cost.”
Sir Robin Jacob, who was also sitting on the case, agreed, stating his conviction “that nothing of val-ue could come out of the proposed evidence”.
“Eight of the 13 proposed witnesses had been ex-posed to [an] obviously unfair question. The value of their evidence thereafter was obviously nil.”
“This decision does not mean that the days of survey evidence are over … but if the survey amounts to no more than scratching around for something and produces so little as this one has, then there is every good reason in common sense and procedural economy for excluding it along with any resultant witnesses.”
As a result of the latest decision, the main case over Marks & Spencer’s ownership of keywords that are also Interflora trademarks will be heard this month without the support of the survey data.
A Marks & Spencer spokesperson said that the retailer is “pleased” that the court found in its favour, but added that further comment would be inappropriate while the case is still unfolding.
Interflora declined to comment on the latest de-cision because the case is ongoing.
USPTO issues iPad Mini apologyContinued from page 1
The company filed its trademark application in No-vember 2012 when the iPad Mini was launched. It wanted to register the product’s name for goods such as a “handheld mobile digital electronic de-vice comprising a tablet computer” and an “elec-tronic book and periodical reader”.
But the USPTO issued an office action in January contesting whether ‘iPad Mini’ could be regis-tered because it was “merely descriptive”.
In a new office action to Apple, the USPTO clarified: “The Trademark Act Section 2(e)(1) descriptiveness refusal and the Sections 1 and 45 specimen refusal are both withdrawn.”
“The examining attorney apologises for any in-convenience caused.”
The new decision leaves Apple free to contin-ue with its application, but it will need to make some adjustments to satisfy the USPTO’s remaining concerns.
These include attaching a disclaimer to the word ‘Mini’. In its letter to Apple, the USPTO clarified that this requirement was based on the generic and de-scriptive nature of ‘Mini’ as a term for goods.
The letter added that Apple could satisfy con-cerns by submitting a standard form disclaimer with its application, in the form: “No claim is made to the exclusive right to use ‘Mini’ apart from the mark as shown.”
Another possible obstacle to registration is the potential similarity between Apple’s filing and several earlier trademark applications that are still pending.
“If the marks in the referenced applications reg-ister”, the USPTO clarified in its letter, “[Apple’s]
mark may be refused registration under the Trademark Act because of a likelihood of confu-sion between these marks.”
Apple has six months in which to reply to the office action.
The company has faced complaints from Ama-zon and Microsoft over its claim to ‘App Store’ as a trademark in the US. They have argued that the term is descriptive of online shops that sell computer applications.
It has also had to fight for trademarks protecting the iPad and iPhone names in China, Brazil and Mexico.
Mexico’s highest court recently ruled that Apple is unable to register ‘iPhone’ as a trademark for
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telecommunications because an earlier applica-tion for ‘iFone’ already exists.
India joins international trademark systemContinued from page 1
The country signed up to the international trade-mark system, which enables a filer to protect a mark in up to 88 countries and the EU, on 8 April.
Its minster for commerce and industry, Anand Sharma, deposited its instrument of accession at the World Intellectual Property Organization (WIPO), which administers the Madrid System.
India will become the 90th country to sign up to the Madrid System. It follows Mexico, the Philippines, Colombia and New Zealand. They acceded in 2012.
In a statement, Sharma said “We recognise that this instrument will provide an opportunity for Indian companies, which are increasing their global footprint, to register trademarks in mem-ber countries of the [Madrid System] through a single application, while also allowing foreign companies a similar dispensation.”
Francis Gurry, director general of WIPO, added: “India’s participation in the Madrid System gives
brand owners around the world the ability to extend their protection to the important Indian market, through a single, simplified and cost-effective procedure.”
The Madrid System allows companies to protect their brands internationally with a single-language application (English, French or Spanish) that has one set of fees.
Its popularity peaked in 2012 as more international trademark applications were filed than ever before.
Last year saw 44,018 applications filed (a 4.1 percent increase on 2011). A record number of 41,954 international registrations were also recorded in 2012.
Twitter wins .org address
The domain twitter.org has been transferred to Twitter from its previous holder Moniker Privacy Services after the World Intellectual Property Organization (WIPO) Arbitration and Mediation Center ruled in the social media site’s favour.
Sole panellist Richard Tan transferred twitter.org after finding it confusingly similar to Twitter’s trademark. He also ruled that Moniker had a lack of legitimate interest in the domain and that it was registered in bad faith.
The domain was registered in June 2011 by Mon-iker, a company that offers “a better way to buy, sell and manage domain names” and which the panel found to have “no rights or legitimate in-terests in respect of the disputed domain name”.
The registration came at a time when the Twitter brand was already well established worldwide, just weeks before the micro blogging site hit 100 million active users in September 2011.
Twitter filed its complaint against Moniker in Jan-uary 2013, making one subsequent amendment in February.
Moniker did not submit any response to the complaint.
In his decision, which was published on 1 April, Tan outlined the three grounds for transferring the domain: that it was confusingly similar to the registered ‘Twitter’ mark; that Moniker had no rights or legitimate interests in the domain; and that it was registered and used in bad faith.
“For the foregoing reasons … the panel orders that the disputed domain name twitter.org be transferred to the complainant,” said the decision.
Neither party has commented on the decision.
At the end of last year, Twitter had 500 million users, including Moniker Privacy Services (@monikersnap).
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Aereo receives Court of Appeals approval
Major US TV broadcasters have failed to overturn a district court decision that legitimises the online TV service Aereo, despite a Court of Appeals judge calling the technology behind it “a sham”.
In a decision that was issued on 1 April, the US Court of Appeals for the Second Circuit affirmed the District Court for the Southern District of New York’s finding that Aereo’s TV transmis-sions of copyrighted works are not public per-formances and so do not need to be licensed.
TV broadcasters including Fox and NBC accused Aereo of copyright infringement in March 2012.
They argued that its online TV service, which uses antennas to capture over-the-air transmissions that it then distributes to subscribers over the inter-net to view on their computers and smartphones at a later time, constitutes copyright infringement.
The broadcasters requested a preliminary in-junction that would have barred Aereo from transmitting shows to its subscribers while they were still airing and forced the online service to close, arguing that their exclusive right to pub-licly perform their own works means that the transmissions have to be licensed.
But the district court judge hearing the case disagreed, leading the broadcasters to appeal against the decision.
Affirming the lower court’s decision, Court of Appeals Judge Christopher Droney said that the “transmissions are not public performances”, adding: “If they are not public performances, [Aereo] needs no such licence.”
Aereo argued that that its online service results in a private performance, which is a permissible use of a protected work under US copyright law.
Droney said: “Each user-associated copy of a pro-gramme created by Aereo’s system is generated from a unique antenna assigned only to the user who requested that the copy be made ... the potential audi-ence of each of Aereo’s transmissions was the single user to whom each antenna was assigned.”
The Court of Appeals’s decision was split, with Judge Denny Chin dissenting. He called Aereo’s technology platform “a sham”.
“The system employs thousands of individual dime-sized antennas, but there is no technologi-cally sound reason to use a multitude of tiny indi-vidual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like con-trivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advan-tage of a perceived loophole in the law.”
Broadcasters have responded angrily, with News Corp COO Chase Carey reportedly say-ing that the decision could mean the end of TV subsidiary Fox as a free-to-view channel.
Aereo is currently only available to New York residents, but it is planning to offer its service in other US states.
LCC publishes framework for integrated rights managementThe Linked Content Coalition (LCC) has taken its first step in designing an integrated online rights system by publishing a framework docu-ment identifying the key principles of digital rights management.
The coalition, which began as an initiative of the European Publishers Council, brings together more than 40 industry bodies globally.
Its stated aim is “to enable greater legitimate use of digital content through better manage-ment of data relating to rights”.
The new document—The LCC Framework for the Rights Data Supply Chain—is described as “an in-novative design for integrating data in the network.”
It identifies key principles of digital rights manage-ment and describes how stages in the rights man-agement process could be automated online.
In a statement, LCC chairman and senior vice president of investor relations and public affairs for Axel Springer, Christoph Keese, said: “This is a major step in streamlining and automating rights management for media and the creative
industries. The LCC’s unique collaboration will continue ground breaking work particularly in multimedia rights identification whereby each and every online creation can be identified, tracked and linked back to its creators.”
“This will tackle the burgeoning problem of digital orphans when creators upload new self-published works to the networks and video plat-forms. In future, by declaring rights at point of upload, creators will get recognition and indeed have the opportunity to get paid.”
There are a number of plans for putting the new framework into use.
It is to be tested within the Rights Data Integra-tion (RDI) project, which is co-funded by the Eu-ropean Commission and due to begin in May.
The framework is published at a time of copyright law reconsideration within the European Com-mission, with its Licences for Europe consulta-tions recently drawing to a close in Brussels.
Commissioners are keen to strike a balance between enabling Europeans to enjoy a wide choice of lawful digital content wherever they are and rewarding content creators. They have been talking to industry participants with a view to securing a market-led solution to content access problems.
There are also plans to use the LCC Framework as the basis of a new ‘Copyright Hub’ for the UK.
The hub, which was proposed in the 2012 Copy-right Works report by Richard Hooper and Dr Ros Lynch to simplify copyright licensing in the UK after the Hargreaves Review, is expected to begin its first phase of operation in July.
As the LCC Framework recognises: “There will always be problems with the creation and sup-ply of data, and there will always be many rights transactions and data flows which cannot be wholly automated through data weaknesses or the need for human negotiation.”
“However, there is a great deal that can be done to create a data network suited to digital needs and capabilities that puts users and providers in contact as seamlessly as possible.”
Fox and Universal Studios have taken the un-usual step of using Digital Millennium Copyright Act (DMCA) takedown notices to request the re-moval of several earlier notices from the public domain, according to reports.
The number of DMCA notices that Google re-ceives from rights owners requesting the removal of links to copyright infringing websites in its search results is approaching 20 million per month.
Concern has been voiced about the possibil-ity that indexing DMCA takedown notices in its Transparency Report—Google added them to it in 2012—could create a searchable database of information about where to find potentially pirated material.
Google has not responded to the studios’ re-quests, added the reports.
DMCA notices are widely available to view online.
Google publishes all the notices it receives, and a list is compiled by the website Chilling Effects, a collaboration between the Electronic Frontier Foundation and law clinics at a number of US law schools, in the interests of online rights awareness.
The requests from Fox and Universal Studios come not long after Google’s move to expand its Transparency Report to include detailed informa-tion about takedown notices from rights owners.
Fred von Lohman, senior copyright counsel at Google, wrote in a blog post last year: “Fight-ing online piracy is very important, and we don’t want our search results to direct people to ma-terials that violate copyright laws. So we’ve al-ways responded to copyright removal requests that meet the standards set out in the DMCA.”
“At the same time, we want to be transparent about the process so that users and researchers alike understand what kinds of materials have been removed from our search results and why.”
WIPO optimistic about ADR following dispute resolution survey
A new World Intellectual Property Organiza-tion (WIPO) Arbitration and Mediation Center survey demonstrates significant time and cost advantages of alternative dispute resolution methods compared with court litigation in cas-es of technology disputes.
The survey, which collected responses from 392 parties in 62 countries, emphasised that the over-all incidence of disputes arising in technology agreements was fairly low at 2 percent.
Of these disputes, 25 percent arose from li-cence agreements and 18 percent came from research and development deals.
Where these disputes do occur, the report concluded, there may be significant advantages to using media-tion or arbitration instead of going to court, particularly in terms of time and cost, which were found to be the primary concerns of the survey’s participants.
While respondents spent an estimated three years and $850,000 on court litigation in an international dispute, most were able to resolve a similar dis-pute within eight months through mediation or slightly more than one year through arbitration, and costs were typically much lower at an average of $100,000 for mediation or $400,0000 for arbitration.
Other mechanisms such as expedited arbitration and expert resolution may offer still better results in terms of time and expense, according to the survey.
Commenting on the report, Francis Gurry, di-rector general of WIPO, was enthusiastic about the alternative resolution methods. “What this survey is telling us is that non-court options—namely arbitration and mediation—are deliver-ing significantly better results [than litigation].”
But Gurry noted that traditional litigation remains the “default path” for resolving disputes in technology agreements. Although survey participants perceived a general trend towards using ADR more widely, these mechanisms may remain under-used.
Prince takes down infringing videos
Twitter has removed eight videos clips from its new Vine platform after Prince’s record label com-plained that they infringed the music artist’s rights.
The social media site added the Vine platform in January. It allows users to embed six-second videos within their tweets and was developed by Vine Labs, which Twitter bought in October 2012.
Prince’s record label, NPG Records, filed a Digi-tal Millennium Copyright Act (DMCA) takedown request with Twitter on 22 March. The social media site publishes all of the DMCA notices that it receives on Chilling Effects, a self-styled clearinghouse of legal complaints.
NPG Records asked Twitter to remove eight vid-eos from the Vine platform because they featured “unauthorised recordings” and “unauthorised syn-chronisations”. It provided links to all of them.All of the videos have now been removed from Vine.
In November 2012, Twitter changed its copy-right infringement policy in “an effort to be as transparent as possible regarding the removal or restriction of access to user-posted content”.
It began sending takedown requests to Chilling Effects, with all personal information redacted.
Instead of immediately removing an offending Tweet as soon as a DMCA takedown notice is received, as was the case before its policy change, Twitter now withholds them.
A withheld tweet is still accessible, and users
can comment, but it carries the message: “This Tweet from @Username has been withheld in response to a report from the copyright holder.”
Apple patents offline purchasing
The United States Patent and Trademark Of-fice (USPTO) has approved a patent application from Apple for a system that allows consumers to buy iTunes content offline.
The application, which is entitled ‘On-device offline purchases using credits’, was filed in January 2010.
The patented system allows users to “unlock” rec-ommended media items that have been stored on their devices using pre-purchased credits.
As the patent explains, a device “can store lo-cally for future use one or more recommended media items received from the [iTunes] store when a connection with the store is available”.
“Access to the recommended media items can be restricted, so that the user cannot consume the media items without first purchasing them.”
“To complete a media item purchase without send-ing transaction information to the media store, the electronic device can store pre-paid credits locally on the device [and] in response to a user request to purchase a particular recommended media item … can deduct the cost of the recommended media item from the locally stored credit, and re-move the access restrictions of the device.”
Consumers have expressed some doubt over the usefulness of the innovation given the fre-quent internet access of many iTunes users.
The patent was among 41 granted to Apple yesterday, including a one for a multi-touch de-velopment and another concerning improved FaceTime video conferencing.
US court: ReDigi cannot hide behind first sale doctrine
ReDigi infringed the copyright of Capitol Re-cords when it allowed its users to resell their digital music through its online marketplace, ac-cording to a US district court.
Judge Richard Sullivan, sitting in the US District Court for the Southern District of New York, dis-missed ReDigi’s first sale defence on 30 March.
He granted Capitol Records’s motion for sum-mary judgement on its claims for the website’s direct, contributory and vicarious infringement of its reproduction and distribution rights.
Capitol Records filed a complaint against Re-Digi in January 2012, alleging that its rights were being infringed on the website’s online marketplace, which sees users reselling a number of its recordings.
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Users of ReDigi can only upload and sell digital music that they purchased through the online marketplace or from iTunes. Once a music file is sold—ReDigi takes a 60 percent cut—access is transferred to the buyer, who can download, stream or resell it.
Uploading sees a pre-downloaded programme move the file to ReDigi’s remote server in Ari-zona and delete it from the seller’s computer.The uploading process was the bone of conten-tion between ReDigi and Capitol Records, with the website and record label both filing motions for summary judgement in July 2012.
ReDigi said that the uploading process moves a file from a user’s computer “packet by packet”—with no copying—but Capitol Records argued that this was semantics.
In granting Capitol Records’ motions for sum-mary judgement and denying RedDigi’s first sale defence, Sullivan ruled: “The first sale defence is limited to material items, like records, that the copyright owner put into the stream of commerce.”
“Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material ob-jects, namely, the ReDigi server in Arizona and its users’ hard drives. The first sale defence does not cover this any more than it covered the sale of cas-sette recordings of vinyl records in a bygone era.”A statement from ReDigi said that the website is “disappointed” with the decision against its 1.0
service. It added that the case has “wide rang-ing, disturbing implications that affect how we as a society will be able to use digital goods”.
“The order is surprising in light of last month’s US Supreme Court decision in Kirtsaeng v Wiley & Sons, which reaffirmed the importance and ap-plicability of the first sale doctrine in the US. Also, within the past year the European Court of Justice has also favourably underscored the importance of the ‘first sale’ or the ‘copyright exhaustion’ doctrine and its direct application to digital transactions.”
The company said that it intends to appeal against the decision. ReDigi and Capitol Re-cords must submit letters to the court to discuss damages and other issues.
In Kirtsaeng v Wiley & Sons, which saw a book publisher contest the legality of buying legitimate works abroad and reselling them in the US, the Supreme Court ruled that that copyright law’s first sale doctrine means that a rights owner loses its exclusive right to distribute a work once it is sold, whether that is in the US or abroad.
Book publishers said that the decision “ignores broader issues critical to America’s ability to compete in the global marketplace”.
Prosecutions for online counterfeit sellers
Defendants in California and Washington face criminal charges and compensation orders after al-legedly selling counterfeit products online.
Edward Alarcon of North Hollywood was given a 15-month sentence for two counts of trafficking in counterfeit pharmaceuticals, and ordered to pay $1000 in compensation to both Eli Lilly and Compa-ny, the manufacturer of Cialis, and Perdue Pharma LP, the manufacturer of OxyContin.
Meanwhile, Vitality Yaremkiv of Vancouver was charged with four counts of trafficking counterfeit air bags, for which he may face up to 10 years’ im-prisonment and $2 million in fines.
The defendants were accused of selling the coun-terfeit goods on Craigslist and eBay respectively.
Prosecutors in the cases have commented on the dangers inherent in selling counterfeit products. Commenting on the Yaremkiv case, Brad Bench of Homeland Security Investigations Seattle de-scribed counterfeit air bags as “untested, unregu-lated, and extremely unsafe”.
The criminal charges in the cases reflect the public implications of counterfeiting, but the compensation that Alarcon was ordered to pay also highlights the corporate implications of the practice.
The cases come at the same time as reports that some New York state officials are renewing efforts to make purchasing counterfeit products illegal in the state.
If the law is passed, consumers of counterfeit goods could be prosecuted and face fines and prison sentences.
Online counterfeiting is reportedly a massive problem in China—how true is this perception?
It is true that there are many counterfeiters mak-ing online sales of counterfeit products, and it is not difficult to find and purchase counterfeit products online. In practice, many sellers publish information of genuine products online and even advise consumers that they are the agents or authorised dealers of brand owners, while how-ever, they actually sell counterfeit products after receiving orders.
In practice, it is difficult for common consumers to tell whether or not the products are genuine or counterfeit based only on the information pub-lished by counterfeit product sellers. Sometimes, it is even not so easy for brand owners to directly affirm counterfeit products without further inves-tigation, even if those counterfeiters offer prices that are much lower than market prices of genuine products, and/or indicate that they are authorised dealers (from which brand owners can only sus-pect but cannot directly affirm that they are selling counterfeit products). This is unless those sellers sell products bearing brands that are similar to in-stead of being identical to their own brands, or the brand owners do not have such products at all.
What are the popular products being counterfeited and sold? Those products under famous brands will often be counterfeited, no matter what kind of products they are. In general, the products that are not diffi-cult to make (without or with low technology), such as consumer goods, electrical appliances, gar-ments, and even steel, are the popular products being counterfeited and sold.
Are China’s search engines contribut-ing to the availability of counterfeits?
It is not difficult to find counterfeit products if they have been promoted online. Though the most popular search engine in China is Baidu (baidu.com), it is easier to find counterfeit prod-ucts through searches on famous B2B/B2C websites such as Alibaba (alibaba.com) and Taobao (taobao.com). The search could be made with the brands and the products names as the keywords, and links to the information of genuine and counterfeit products would be shown.
What can brand owners do to tackle counterfeits through China’s search engines? Brand owners can request China’s search engines to move the links of web pages, on which counterfeit products are published for sale, based on China’s Tort Law and Trademark Law, and other related laws and regulations. However, brand owners should pro-vide the search engines with solid evidence proving the sale of counterfeit products in advance.
In practice, brand owners are recommended to search on B2B/B2C websites to find suspected products and the information of sellers. After-wards, brand owners may search on Baidu to find more information about the sellers of sus-pected products. However, since it is not so easy for brand owners to directly prove that those sellers are selling counterfeit products, they will need to make further investigations to find sellers and to collect evidence proving the facts. Google operates a strict policy for trade-marks—do China’s search engines operate something similar?
China’s search engines, such as Baidu, and B2B/B2C websites, such as Alibaba and Taobao, have set up online complaint centres to receive complaints from brand owners. They will move the information of counterfeit products, when they are informed of the acts of sales of coun-terfeit products and provided with effective evi-dence. However, most of time they will not stop others from publishing information of counterfeit products without brand owners’ complaints, be-cause they have no ability and are not the right parties to tell and affirm the counterfeit products.
How useful are these policies and what could be done to improve them?
Brand owners can reach the goal of removing the links to counterfeit products after lodging com-plaints with effective evidence. It would be better if those search engines could set up ‘blacklists’ for those counterfeiters who publish sales information of counterfeit products again and again. IPPro
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PatentLitigation
As the US patent battlefield is being almost forcibly reconstituted, many attorneys are having to learn new ways of addressing patent damages.
A quick summary of what’s happening in the very active patent infringement arena is that the ‘entire market value rule’ (EMVR) is be-ing modified by a much stronger emphasis on the concept of ‘consumer demand’. Court of Appeals for the Federal Circuit judge Ran-dall Rader is partially responsible for this sea change in damages assessment.
This shift is most evident in the field of con-sumer and electronics products, where one source has estimated that more than 200 pat-ent lawsuits are underway at any one time.
In recent lawsuits that are familiar to most patent attorneys—Lucent Technology v Gateway, Cornell University v Hewlett Pack-ard Company, and IP Innovation v Red Hat
Inc—patent holders who allege infringement are finding it more difficult to claim royalties applied to the entire value of a product that contains the patented feature.
In Lucent Technologies v Gateway, (and in-directly, Microsoft), the jury in 2008 awarded $357 million in damages to Lucent for a pat-ent that allowed entering data without use of a keyboard, in the principal application a ‘date picker’ function employed by Microsoft in its very popular Outlook software. This ‘mega award’ was vacated by the Court of Appeals for the Federal Circuit, which said that the jury had improperly used the EMVR. The court concluded that “numerous features other than the date-picker appear to account for the overwhelming majority of the consum-er demand and therefore significant profit”. A new damages trial was ordered.
A similar finding was the conclusion of Rader in Cornell University v Hewlett Packard Com-
pany. In this case, the jury found infringe-ment of a part of what is called a CPU brick and awarded $184 million to the university based on an 8 percent royalty of the CPU brick that contained the patented item. Rader reduced the award to $53 million because no evidence was offered to show “a connection between consumer demand for that product and the patented invention”.
And in the Red Hat case, Rader said that EMVR may be in play only when the patented feature forms “the basis for consumer demand” for the larger product in which it is contained.
Thus, courts are increasingly moving to an emphasis on to what extent, if any, the al-leged infringing patent provides the basis for consumer demand.
To address this need for quantification, several types of surveys have been imple-mented, including the statistical approach of
The unsettled storyNo one method has come out ahead in this new arena of needing consumer surveys to moderate the entire market value rule, say Gabriel Gelb and Betsy Gelb
12 www.ipprotheinternet.com
PatentLitigation
conjoint analysis, importance, satisfaction or usage scores, and scenarios. None of these appear to have the upper hand.
Asking consumers in a survey why they pur-chased a particular product is useful but typi-cally results in a distorted picture. Consumers, upon reflection, usually respond that the major-ity of a product’s features are ‘very important’. This response is not useful when, in a case of alleged patent infringement, an important issue for damages is the relative impact of a patented item on sales or market share.
In a recent damages case, the senior author rebutted the plaintiff’s survey that involved asking which features of a product were im-portant, saying “on average virtually all of the features studied for the [product named] were rated as important on the monadic rating scales”.
As noted in the textbook, Consumer Behav-ior (3rd edition, Hoyer and MacInnis): “Our memory of details decreases over time. Thus, the attribute information we recall tends to be in summary or simplified form rather than in its original detail.”
The reason that consumers are likely to say that every feature or benefit is somewhat or very important is that they have, over time, discarded many of the original motivations and summarised what is left in memory.
Another problem is that asking consumers to evaluate features one at a time does not take into account the multiple trades-offs that consumers are simultaneously making. These may include quality versus price, fa-mous brand name against a lesser brand, and so on.
Conjoint analysis, which is a 30-year-old mathematical concept that measures the trade-offs that people make in decision-making, is now being applied to damages assessment. It is also used in a wide variety of fields, including financial decision-making, sports, procurement, healthcare, retirement considerations and operations research.
What conjoint analysis does is learn how con-sumers value and choose among products that consist of multiple attributes when trade-offs are involved across attributes. This is es-pecially useful in designing new products.
Our firm has been using conjoint analysis since the 1980s and a firm in Boston, Ap-plied Marketing Science, has successfully employed conjoint methods in two damage assessment cases, Barbara Schwab et al v Philip Morris et al, and in the US Dis-trict Court for the Eastern District of Texas, TiVo v EchoStar.
A product or service consists of a bundle of attributes. When conjoint analysis is em-ployed, consumers view sets or a ‘package’
of features at the same time and are asked to choose among those sets. The sets them-selves systematically combine attributes, and when many individuals have made choices, the relative valuation of each individual at-tribute can be determined through software designed for that purpose.
Today, because there are several forms of conjoint analysis such as discrete choice modelling, care must be taken in organising the design of the research. But the results are quite clear in formulating how consumers value each particular attribute or variations of that attribute.
Thus, for the purposes of assessing how a particular patented item contributes to con-sumer demand, conjoint analysis may offer a useful solution, especially when the courts require that consumer input be considered a crucial part of damages assessment. But the technique only applies when a limited number of patented features/attributes are in play. Most experts agree that basic conjoint can be most effective when six to 10 attri-butes are being measured.
Therefore, other survey approaches should be employed when a product has many more features than 10. And that is especially the case in patent infringement cases involv-ing smartphones. They are a single product offering virtually hundreds of features. In a recent case, Oracle v Google, the survey ex-pert only measured seven features while ac-knowledging that many more existed. Judge William Alsup refused to admit a major por-tion of the survey.
One method we are experimenting with to address multiple features in a smartphone is called loss aversion, an important compo-nent of behavioural economics. It is based on the Nobel Laureate Daniel Kahneman’s work that people prefer avoiding losses to seeking gains. For example, in a portfolio held by an individual, he or she will typically hold on to stock that has declined in value and sell one that has gained to avoid actually incurring the financial loss. Loss measurement is be-lieved to be more realistic in evaluating pat-ent benefits because it mimics the irrational decisions we make to avoid a loss.
Loss aversion is the bedrock of the new field of behavioural economics. John List, chair of the University of Chicago’s economics de-partment, stated: “It’s a deeply engrained be-havioural trait ... that all human beings have this underlying phenomena that ‘I really, re-ally dislike losses and I will do all I can to avoid losing something.’”
We’ve applied loss aversion to patent dam-age cases in two smartphone cases. That means that instead of asking respondents how much they would pay to receive a par-ticular feature, we asked them to picture their phone as currently constituted “with
all its features” and then asked how much less it would be worth without the patented feature, for which infringement was claimed. We also asked, as a control, a second ques-tion about another feature, and then sub-tracted the value that they attributed to that control from the value of the patented fea-ture, to control for overestimation.
“Loss aversion has important implications for positive analysis of law,” according to professor Cass Sunstein of the University of Chicago Law School. In a working paper, he concluded: “With all the recent advances, be-havioral research remains in an early stage. There is much to learn. An understanding of its implications for questions of law will take a long time.”
Today, with several types of surveys measur-ing consumer demand, no one method has emerged as best in this new arena of need-ing consumer surveys to moderate the en-tire market value rule. The patent attorney or litigator should select only the most highly experienced survey expert and work closely with that expert to thread through the com-plexities of measuring the consumer value of disputed patents. IPPro
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IndustryEvents
International Trademark Association’s Annual Meeting
Location: TexasDate: 4-8 May 2013www.inta.org
The International Trademark As-sociation’s Annual Meeting is the must-attend yearly event for legal professionals with an interest in trademarks and related intellectual property. Attendees say, “if you’re not there… you’re not serious about trademarks!”
AIPPI Forum & ExCo
Location: HelsinkiDate: 5-11 September 2013www.aippi.fi
Helsinki, the capital of Finland, is a vibrant metropolitan city with over half a million residents and is located at the heart of the Bal-tic Sea area. The lifestyle in the second-most northern capital city in the world is full of contrasts and ac-tivities. Helsinki’s identity has been formed by cultural influences from both the East and West - its cultural diversity is hard to match. Helsinki has sometimes been described as “the smallest big city in the world”.
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201310th Annual Patents for Financial Services Summit
Location: New YorkDate: 24-25 July 2013www.worldcongress.com
The protection of patents and IP is critical to the financial services indus-try due to the increasingly competitive marketplace and the growth of patent trolls. You must ensure protection of your own innovation to remain com-petitive and take great care to avoid infringing on the patents of others.
MARQUES Annual Conference
Location: Monte CarloDate: 17-20 September 2013www.marques.org
The protection of patents and IP is critical to the financial services indus-try due to the increasingly competitive marketplace and the growth of patent trolls. You must ensure protection of your own innovation to remain com-petitive and take great care to avoid infringing on the patents of others.
Five days of trademark education, networking and endless opportunities for growth!Join over 9,500 attendees from more than 140 countries at the most valuable and cost-effective annual conference for trademark practitioners!
Learn more at www.inta.org/annualmeeting
135th
AnnualMeeting
DallasTexas
May 4–8 2013
Why you should attend• Gain insight on a variety of trademark and leadership topics.• Obtain timely information from influential IP experts–across all
geographic regions and industries.• Access unparalleled networking opportunities.• Attend more than 30 informative and interactive educational
sessions and more than 220 table topic discussions.• Participate in shaping current trademark issues and trends.• Gain access to 100+ trademark solution providers in the
Industry appointmentsLanny Breuer has returned to Covington & Bur-ling LLP as vice chair of the firm.
He takes up the newly created position after spending fours years at the US Department of Justice, most recently as assistant attorney general for the criminal division.
During his time at the Department of Justice, Breuer worked on cyber-crime, IP theft, Foreign Corrupt Practices Act, healthcare fraud, money laundering, financial fraud and public corruption matters.
Most notably, he oversaw the prosecution of the owners of an international data storage web-site for allegedly committing IP infringement in one of the largest criminal copyright cases ever brought by the US government.
Breuer originally joined Covington & Burling in 1989. He left in 1997 to work for the White House before re-joining the firm in 1999 as co-chair of the white-collar defence and investiga-tions practice group.
He left Covington & Burling in 2009 to take up his criminal division role at the Department of Justice.
David Stewart has been re-elected as CEO of Olswang. He will lead the firm for the next three financial years.
As Olswang’s CEO, Stewart will chair the firm’s executive committee, which will be charged with implementing the firm’s strategy and managing the business.
Prior to being elected CEO in 2010, Stewart had served as the firm’s managing partner since 2007.
During his tenure as CEO, Olswang has gone through a wave of international expansion, with the firm opening offices in Singapore in early 2012, Paris and Munich in 2011 and Madrid in 2010.
Mark Devereux, senior partner at Olswang, said: “Stewart’s re-election is a direct conse-quence of the clarity of his vision for Olswang and the results he has brought in his first term as CEO. The overwhelming vote in a high turn-out poll demonstrates the partners’ confidence in [his] abilities.”
Barnes & Thornburg LLP has appointed Peter Reyes as a partner in its IP practice. He will be based in the firm’s Minneapolis office.
He was previously a senior IP lawyer at Cargill, which produces and markets food, agricultural, financial and industrial products.
In this role, Reyes managed the IP portfolio for various business units while also preparing and negotiating a range of IP-related contracts and transactions, including mergers and acquisi-tions, divestitures and joint ventures.
He also provided counsel and advice on other
IP-related matters, including litigation, due dili-gence and intellectual asset management is-sues domestically and internationally.
From 2005 to 2008, Reyes worked as Cargill’s regional IP coordinator for Latin America, where he helped to build and coordinate an interna-tional team to address IP needs in the region.
The new Barnes & Thornburg partner also serves as national president of the Hispanic Na-tional Bar Association.
Sidley Austin LLP has recruited Jennifer Coplan as a partner in its global technology transactions practice. She will be based in New York.
Coplan joins the firm from Cooley LLP, where she was a partner. Her arrival follows that of Silicon Valley-based IP and technology transactions partner Glenn Nash, who joined in August 2012.
The new partner advises clients on complex global and domestic technology transactions, including joint ventures and M&A, as well as on a range of IP matters.
She regularly counsels clients, which include consumer electronics, technology and motion picture companies, as well as companies in the financial services and social media industries, on matters such as content distribution, digital rights management, content protection, cloud computing, and IP development and licensing.
Jeffrey Rothstein, global co-chair of Sidley Austin’s technology transactions practice, said: “[Coplan] has a well-deserved reputation for ex-cellence in the world of technology transactions, especially in the areas of digital media and copyright policy, and she has developed an im-pressive international client base. She bolsters our already strong ability to advise clients on the most complex and novel digital content issues facing companies today.”
Sidley Austin has also appointed patent trial lawyer Patricia Thayer as head of its IP litiga-tion practice on the West Coast, which boasts approximately 25 lawyers, whiile Bradley Ellis and Rollin Ransom have been made co-heads of its Los Angeles litigation practice.
The practice consists of 60 lawyers who handle trial and litigation of business and commercial matters in federal and state courts throughout California and across the US.
Perkins Coie LLP had added another partner to its Denver office in less than a month with the appointment of Michael Henson to its IP prac-tice from Holland & Hart LLP.
His appointment follows the arrival of partner Brian Kinnear, who joined on 18 March.
Henson is a patent and trademark prosecution and litigation lawyer. His clients include an array of technology companies.
Quinn Emanuel Urquhart & Sullivan LLP has elected three new lawyers to its partnership in various US offices.
Carl Anderson in San Francisco, Justin Grif-fin in Los Angeles and Joseph Milowic in New York were all promoted to partner. The trio all practice litigation.
Amar Thakur has also been recruited for Quinn Emanuel’s Los Angeles office, specialising in IP litigation and licensing.
Thakur will focus on the development and en-forcement of patent portfolios, as well as creat-ing partnerships between IP clients and private equity firms. IPPro
