Business Intelligence Q4 2018 / Business Intel Q4 document€¦ · Business Intelligence Q4 2018 In its annual update of the “Guidelines for Examination”, the European Patent

Business Intelligence

Patenting AIWhat do the European Patent Office'snew guidelines tell us?

also in this issue, The EUCopyright Directive: seeingthe funny side?, DiagnosisData - how to secure IP onhealthcare apps and Brexit -what would 'no deal' meanfor IP?

Patenting AI: the EPO's newguidelines

Playing Fairly in Appeals

The EU Copyright Directive: Seeingthe funny side?

Diagnosis Data: Getting the IP righton healthcare apps

From track to showroom,motorsport still a test bed formainstream auto industry

'No-deal Brexit’ - what would itmean for IP?

The UK’s implementation of the EUTrade Marks Directive 2015

Patenting AI:the EPO'snewguidelines

Business Intelligence Q4 2018

In its annual update of the “Guidelines for Examination”, theEuropean Patent Office (EPO) has provided further guidance for itsexaminers in relation to the patentability of inventions relating tomathematical methods and computer programs. This updatedguidance is of particular relevance to inventions relating to the fast-growing field of Artificial Intelligence (AI).

By way of background, the patentability of computer implementedinventions at the EPO has long been governed by the generalprinciple of requiring a non-obvious technical solution to a technicalproblem, as established by the EPO Boards of Appeal in T0641/00(COMVIK).

In particular, features which are directed to one of the exclusions topatentability cited in Article 52(2) EPC can be considered to be non-technical if lacking an associated technical effect. One suchexclusion is if a feature is considered to relate purely to amathematical method. A close inspection of the technical workingsof any AI application is likely to reveal some form of mathematicalmodel at its heart. Therefore, it is possible that an AI invention maybe considered to be excluded from patentability on the grounds ofbeing directed to a mathematical method as such. In other words,an AI invention may be considered to be non-technical in the eyes ofan EPO patent examiner and therefore unlikely to be allowed by theExamining Division of the EPO. Over the past few years, the EPOExamining Division has attempted to harmonise practice when itcomes to determining what is and is not technical in nature by re-writing its guidance for examiners in relation to assessing thepatentability of computer implemented inventions. Last year’supdate to the “Guidelines for Examination” focused on Presentationsof Information and User Interfaces. In this year’s update, the focushas been on providing further guidance on what the ExaminingDivision of the EPO is likely to consider technical and non-technicalwith respect to mathematical methods and AI inventions.

The EPO operate a “two-hurdle” approach. According to thefirst hurdle the claimed subject matter must have atechnical character. However this is easy to overcome inpractice by, for example, amending from a method [ofperforming a machine learning algorithm] to claim acomputer-implemented method. The second hurdle is moredifficult, and requires a technical contribution to inventivestep. However claims may include a mix of technical andnon-technical features and all features contributing totechnical character should be taken into account – forexample a mathematical method may contribute toinventive step if, say, it is applied to a specific technicalproblem such as image processing. In another example thenecessary technical character may be provided by claimingspecially adapted hardware to implement a procedure.

In more detail, the new guidance provides two relateddirections in which inventions comprising mathematicalmethods can be claimed in order to avoid potentialexclusion from patentability. The first direction is to restrictthe claims to a specific technical purpose or application.This direction is based upon the decision in T1227/05(INFINEON) in which a mathematical method for generatingrandom numbers according to a specific distribution wasfound to be technical if the claim was restricted to a“computer-implemented method for numerical simulation ofa circuit subject to 1/f noise”. In this case, the Board ofAppeal decided that “numerical simulation of a circuitsubject to 1/f noise” was a specific technical purpose towhich the mathematical method for generating randomnumbers according to 1/f noise contributed.

"...claims may include amix of technical andnon-technical featuresand all featurescontributing totechnical charactershould be taken intoaccount – for example amathematical methodmay contribute toinventive step if, say, itis applied to a specifictechnical problem suchas image processing."

Global AI related patents 2008 to 2018 (projected)

Darren [email protected]

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Business Intelligence Q4 2018In relation to AI inventions, the guidelines provide specificexamples of technical applications - listed opposite.

An AI invention falling within one of the examplecategories with claims restricted to that specific purpose islikely to be considered technical. The precise level ofspecificity required for restricting the claims is however notfully known. What is certain though is that a genericstatement of “for the control of a technical system” will notbe seen as a restriction to a specific technical purpose andwill almost certainly be objected to.

In addition, the technical purpose is primarily determinedby the direct technical relevance of the results provided bythe mathematical method rather than the nature of thedata input to the mathematic method.

The second direction requires claiming a specific technicalimplementation of a mathematical method that has beenspecifically adapted to run on a particular hardwareconfiguration, or in the words of the EPO, “the design ofthe mathematical method is motivated by technicalconsiderations of the internal functioning of the computer”.

The guidelines provide a specific example of theadaptation of a polynomial reduction algorithm to exploitword-size shifts matched to the word size of the computerhardware in order to provide an efficient hardwareimplementation of the algorithm.

Whilst there are few examples of what constitutes aspecific adaptation, it seems likely that the specificadaptation of an AI algorithm to particular hardware, forexample, the adaptations required for implementing aneural network on a GPU or other distributed/parallelprocessing hardware will be considered technical andtherefore unlikely to fall under a non-patentable subject-matter exclusion in Europe.

In summary, a claim to an AI algorithm based upon amathematical or computational model on its own is likely tobe considered non-technical. A simple recitation of a typeof artificial intelligence model being employed, such as, aneural network, a support vector machine, or reasoningengine alone in the claims is unlikely to overcome suchobjections. However, restriction of the claim to a specifictechnical purpose and/or a specific technicalimplementation may impart technical character onto the AIalgorithm and thus the invention may be consideredpatentable by the EPO.

As AI becomes increasingly prevalent in our society, weare sure to see more patent applications directed to AIinventions. The updated “Guidelines for Examination”provides further guidance on what may be consideredpatentable by the EPO.

"An AI invention fallingwithin one of the examplecategories with claimsrestricted to that specificpurpose is likely to beconsidered technical. Theprecise level ofspecificity required forrestricting the claims ishowever not fully known.What is certain though isthat a generic statementof “for the control of atechnical system” will notbe seen as a restrictionto a specific technicalpurpose and will almostcertainly be objected to."

In relation to AI inventions, the guidelines provide the following as specific examples oftechnical applications:

- use of a neural network in heart monitoring apparatus to detect irregular heartbeats

- classification of images, videos, audio or speech signals based on low-level features (e.g.edges or pixed attributes for images) and the training of such classifiers, for example:

a. detecting persons in a digital imageb. seperation of sources in speech signalsc. speech recognition, e.g. mapping a speech input to a text output

It is particularly noted that classification of text documents solely in respect to their textualcontent is not regarded as a technical purpose but a linguistic one. Other more generalexamples of technical purposes provided in the guidelines include:

- control of a specific technical system/process

a. outside of a computer, e.g. X-ray apparatus or a steel cooling processb. inside the computer, e.g. resource allocation in a distributed computing system

- audio/image/video enhancement or analysis, e.g.

a. denoising of digitial imagesb. estimation of quality of transmitted digital audio signals

- data encoding or compression for transmission and/or storage

- encryption/decryption or signing electronic communications

- optimising load distribution in a computer network

- providing a genotype estimage based on an analysis of DNA samples

- providing a medical diagnosis by an automated system processing physiologicalmeasurements

and the somewhat vaguely defined:

- simulating the behaviour of an adequately defined class of technical items or specifictechnical processes, under technically relevant conditions

- technical design of a specific technical system/process, including determination of optimaltechnical parameters


Playing fairly inappealsSophie [email protected]

Following an appeal by both the patentee (Eli Lilly) and the opponent (Dr ArminK. Bohman), the Board of Appeal of the European Patent Office recently raisedimportant points regarding the completeness of a party’s case and therequirement for fairness to both parties in the proceedings, as well as the natureof admissible expert evidence.Late-filed submissions

The patentee filed expert evidence less than two weeksbefore oral proceedings before the Board, in response to apreliminary opinion of the Board. One (D42) was atechnical declaration, while the other (D43) was an opinionof a former member of both the Technical Board of Appealand the Enlarged Board of Appeal. In particular, theopinion D43 centred on whether the claims of the patentunder appeal recited subject matter which extendedbeyond the content of the parent application as filed.

The patentee argued that this evidence was filed inresponse to the Board’s preliminary opinion which was notin the patentee’s favour. The patentee argued that it hadbeen surprised by this preliminary opinion, whichcontradicted the opinion of the Opposition Division, and,therefore, it was only after receipt of the Board’spreliminary opinion that it was able to respond to this newassessment of the claims.

However, the Board held that the patentee should nothave been surprised that the Board disagreed with theOpposition Division. In particular, the opponent hadappealed the decision of the Opposition Division. Thus, asthe Board pointed out, if a decision is appealed, there isevery possibility that the Board will disagree with theappealed decision. The patentee should, therefore, haveconsidered such a possibility, and should have planned itsstrategy accordingly.

With regard to the technical declaration (D42), the Boardconsidered that it set out a large number of facts andassertions which the opponent would need time torespond to. The Board considered that the opponentwould not have sufficient time to respond without an

adjournment (as D42 and D43 were filed less than twoweeks before oral proceedings), but that an adjournmentwould be contrary to the principle of procedural economy(and had also not been requested). Thus, D42 was notadmitted.

With regard to the opinion of the former member of theTechnical Board of Appeal and of the Enlarged Board ofAppeal (D43), the Board pointed out that expert evidencewas intended to assist the Board in matters which lieoutside their technical expertise. However, the assessmentof whether the claims recite subject matter extendingbeyond the content of the parent application as filed isentirely within the expertise of the Board of Appeal. TheBoard also considered that, if it were swayed by D43, itwould be lending undue weight to the individual makingthe argument, rather than focus on the argument itself.Thus, D43 was also not admitted.

Late filed requests

Auxiliary Requests 19 and 20 were filed during oralproceedings before the Board. In particular, AuxiliaryRequest 19 was filed only after the Board had announcedthe results of its deliberations on the Main Request andthe preceding Auxiliary Requests, and Auxiliary Request20 was filed only after the Board had announced the resultof its deliberations on Auxiliary Request 19.

As a general point, the Board held that the “reactiveapproach” of the patentee was a fundamental flawbecause it is incompatible with the judicial nature of appealproceedings. In particular, all parties to the proceedingshave a right to know from the start of proceedings theessential aspects of the case they have to meet, and theBoard pointed out that the Rules of Procedure for the

Boards of Appeal (Article 12(2)) requires the statement ofgrounds for appeal to set out the party’s complete case.Although the Board has discretion to admit late-filed facts,evidence and requests, the Board held that the overarchingconsideration when exercising discretion must always be thatthe proceedings are fair. The Board considered that, when aparty reacts mainly to the communications or opinions of theBoard, rather than to the submissions of the other party, itseeks an unfair advantage over the other party.

Referring to Auxiliary Requests 19 and 20 specifically, theBoard held that these Requests were not admissible: firstlybecause they did not, prima facie, overcome the objectionsthat they were directed towards and they raised new issueswhich needed to be considered; secondly, because the Boardheld that they were filed to allow the patentee to adjust itsstrategy in view of the Board’s deliberations during oralproceedings.

The timing of the filing of these Auxiliary Requests meant thatit was difficult for the opponent to react, thereby providing anunfair advantage to the patentee. The Board held that this washard to reconcile with the principle of fairness of theprocedure, and commented that this reason alone would havebeen enough to refuse admission even without consideringwhether the Auxiliary Requests overcame the deficienciesnoted in the preceding Auxiliary Requests.

This decision highlights several points. First, that anappellant’s case must be as complete as possible at the timeof filing the statement of grounds of appeal, and partiesshould, from the outset of the appeal, consider the possibilitythat the Board of Appeal might not agree with the first instancedecision.

Second, parties should act in a way which is fair towards theopposing parties. In particular, this means that parties shouldnot act in a manner which is reactive only to the Board’sopinions but, rather, should act in a manner which is reactiveto the other party’s submissions.

Finally, parties should be careful that expert evidence providesguidance only on issues which are not within the expertise ofthe Board of Appeal.

"As a general point, the Board held thatthe “reactive approach” of the patenteewas a fundamental flaw because it isincompatible with the judicial nature ofappeal proceedings."


The EUCopyrightDirective:Seeing thefunnyside?Mike [email protected]

Following an initial rejection, theEuropean Parliament recently voted infavour of an amended version of theEU Copyright Directive. The Directiveis aimed at providing greaterprotection for copyright owners byputting the onus on websites andinformation service providers (ISPs) totake down copyright infringingmaterial.

content for potentially infringing content. Given the volumeof content uploaded every day on the internet, AI wouldprobably be the only feasible way of monitoring forcopyright infringements, and hence staying on the rightside of the Directive.

Even if it worked, however, using automated software inthis way begs many questions.

For example, if a member of the public uploaded a memewhich reproduced copyrighted material but didn’t infringethat copyright by virtue of the parody defence (i.e. thecontent is used for the purpose of caricature, parody orpastiche), would AI software be able to detect the fact thatthe meme constitutes an expression of humour andtherefore falls within the defence? If not, it may be thecase that internet users are prevented from uploadinglawful content solely due to the limitations of the softwareemployed.

AI isn’t yet renowned for its sense of humour so this couldlead to a real case of ‘the computer says no’!

Following widespread criticism, an amended version ofArticle 13 was voted through the European Parliament andnow places on obligation on online platforms to work withcopyright owners to prevent users from uploadinginfringing content. However, in practice, this provision isstill likely to require the use of artificial intelligence to scanuploaded content.

Reproduction of copyright materials on the internet hasbecome widespread, impacting the ability of copyrightowners to determine where their works have beenreproduced and to receive compensation. As such it hasnot been surprising to see high profile copyright ownerssuch as Paul McCartney lobbying in favour of theDirective.

For others however, the Directive is a threat to internetfreedom.

The crux of the debate focused on Article 13 of of theDirective, which specifically suggested that ISPs use AIenabled content recognition software to monitor uploaded

Other revisions to the draft directive however do lessen the burden on online platforms.

The directive now restricts the type of online platform to which the upload filter applies. In particular, the upload filter onlyapplies to an online platform where that platform optimises and promotes for profit-making purposes the storage andaccess to copyright protected content uploaded by its users. In turn, the upload filter does not apply to platforms that actin a non-commercial capacity such as online encyclopaedias, nor to on-line marketplaces whose main activity is theonline retail of goods. The directive also provides that the upload filter will not apply to microenterprises or small andmedium sized enterprises, on the basis that such enterprises are unlikely to be in a financial position to invest inexpensive AI software to monitor uploaded content.

This amendment to the directive does seek to address the concerns raised by many of the critics of the original draft,although it is likely that the filter will still be found to apply to many medium-sized commercial enterprises who may not beable to meet the costs associated with fulfilling the burden imposed by Article 13.

The revised directive also makes express reference to allow for non-infringing content to remain available, and foreffective and expeditious complaints and redress procedures to be put in place, such that users seeking to uploadcontent have a means of objecting to the unjustified removal of any such content. Hence, if a user seeks to uploadcontent that is rejected by an online platform on the grounds of copyright infringement, the user should be able to contestthat rejection by arguing that the content would not infringe copyright, for instance by virtue of the parody defence.Again, this amendment does address the concerns raised in respect of the original draft, although it remains to be seenhow effective the complaints and redress procedures put in place by any particular online platform will be.

As the law moves to keep pace with rapidly changing technology, striking a balance between the rights of copyrightowners and freedom of expression will be crucial and will raise important questions about who is liable for infringement inthe internet age – users, ISPs, AI programmes?

Copyright owners and internet freedom campaigners will be watching closely as the Directive returns to the European

"...it has not beensurprising to see highprofile copyrightowners such as PaulMcCartney lobbying infavour of the Directive.For others however,the Directive is a threatto internet freedom."


Parliament in January for a final vote, to see what commonground can be found between infringement and parody.

EU Copyright Directive: A timeline

September 2016 First draft of proposedDirective issued

June 2018 European Parliament Committeeon Legal Affairs finalise amendments andsend to European Parliament

July 2018 318 MEPs vote not to proceedDirective to negotiation stage and to re-opendebate on the Directive against 278 who voteto proceed. The Directive is re-opened fordebate.

September 2018 a revised version of theDirective is approved by 438 MEPs

Early 2019 The revised Directive is close tobeing approved by the EuropeanCommission, European Parliament andCouncil of the European Union, subject to afinal vote in 2019. If approved it will be sentto EU Governments to be passed as laws inthose countries.

DiagnosisData:Getting theIP right onhealthcareappsThomas [email protected]

In big news for healthcare appdevelopers, Apple recentlyannounced the opening of itsHealth Records applicationprogramming interface (API). Therecords cover patients at morethan 500 hospitals and clinics andit’s hoped that, by making the dataavailable, a new suit of apps andproducts will be developedfocused on helping patients bettermanage medications, care plansand long term conditions.

how to monetise the app and crucially, how to secure thetime and money invested in developing it with robustintellectual property (IP).

Patents are the best known means of protecting aninvention from imitation. Apps however, as with software ingeneral, are not always easy to patent. The reason for thisis that patents are designed to protect technicalinnovations and not all apps can be considered ‘technicalinnovation’. Many apps are based upon the presentationof data in novel ways – an app might harvest data fromother sources to show you restaurants in your local areafor example. While there is no doubt that many successfulapps have been based upon such principles, theinnovation here is more one of imagination than technicaladvances.

"Generally speakinghowever the mostpatentable apps will bethose that find technicalsolutions to thechallenge of organising,mining and utilisingApple’s healthcare datadump."

Defining what constitutes technical innovation as far asapps go, and what doesn’t, isn’t always easy. Generallyspeaking however the most patentable apps will be thosethat find technical solutions to the challenge of organising,mining and utilising Apple’s healthcare data dump. An appmight use machine learning to navigate the data in newand surprising ways for example – in which case a patentmay well be an option.

Where patents aren’t appropriate, IP protection remainsvital to locking in the value inherent in the developmentand launch of an app. In the absence of patents,trademarks remain the best means of protecting softwareinnovation. Over time, as an app develops and grows itsuser base, its brand will acquire ‘good will’ and a degree offaith in the service it provides. Like any IP, this good will isan asset which can be protected and which is central tothe value of an app. Should a third party app underminethis good will, for example by launching a rival product sosimilar as to confuse consumers, then well protected IPwill allow action to be taken.

Registering a trademark for an app should be one of thefirst steps for any developer – especially in the case of

healthcare apps, where trust and confidence infunctionality, and the ways in which sensitive medical datais being used, is so important.

While the majority of an apps' intellectual property willlikely be covered by patents and trade marks, the app mayalso have an element of design. In this instance,developers might also consider registering designs whichis significantly easier for developers in the UK since theUK ratified the Hague Agreement earlier in the spring.Membership of Hague means a design registered in any ofthe Agreements signatory states, is protected in all othersignatory states – of which there are more than 60.

It will be interesting to see how Apple’s experiment in theUS unfolds, and whether we see any similar initiatives inthe UK (imagine for a minute how much healthcare datathe NHS must be sitting on). The challenge for developerswill be to use the data and develop apps which can cornera section of the healthcare market, and develop productspatients can trust. Intellectual property will be central tomeeting these challenges.

Digital health is a growing field and there is no doubtthat better and more sophisticated apps, underpinnedby better data, have the potential to make a realdifference to people’s health outcomes. Alongsidetechnical challenges, developing successful appsalso poses significant business challenges such as


From track toshowroom: whatthe mainstreamauto industrylearns frommotorsportsAt face value, the gulf between the average family car, and the kind ofhigh-octane machines we see tearing around F1 circuits in Monaco andSingapore might seem unbridgeable. In reality however, motorsport haslong been the laboratory in which innovative new automotivetechnology is trialled, and in the DNA of your family car are things firsttested on the race track. Paddle-shift gear changers and kinetic energyrecovery systems (KERS) are a couple of the more exotic innovations tohave made it from motorsport into everyday driving, whilst the discbrake is a more humble one that we will all be familiar with.

As environmental concerns force changes in consumer cardesign and manufacture, this theme continues inmotorsport also. One of the most exciting developments inmotorsports in recent years has been the emergence ofFormula E, which aims to showcase the rapid progressbeing made towards delivering high-calibre electricvehicles capable of matching combustion engine vehicleson every front. Formula E is quickly becoming a catalystfor innovation, and an opportunity to showcase thatinnovation on an international stage.

Transport remains one of the most innovative sectors ofthe economy. Indeed, until recently, transport was themost popular category for patent filing at the EuropeanPatent Office. Despite an apparent recent drop in thenumber of transport specific patents filed in the last year,the sector continues to innovate.

In many ways the modest decline in patent filing masksthe very high-tech automotive innovation which might notfall into traditional ‘transport’ filing categories.Sophisticated on-board technology, sensors for saferdriving and the complex algorithms that underpin self-driving vehicles, will all be filed under categories morerelated to software and computing than engines anddrivetrains. Machine learning too is a technology withincreasingly broad applications in everything from trafficcoordination to rail and air traffic control and again issomething that may not be captured in the ‘transport’category at the EPO.

In motorsport though we see a lack of patenting activity,with the competitive nature of motorsport perhaps actingas a disincentive to the pursuit of patents. Timing can be asignificant issue. Technology at the top of the racingpyramid, where most money is spent, can changeincredibly quickly and what is successful one season mightbe overtaken by a new technology in the next. Registeringintellectual property like patents is a meticulous process,so isn’t always appropriate in the fast paced world ofmotorsports.

A further disincentive is that it is often the teamsthemselves that decide which new technologies to allow orprohibit. Technology that is the subject of a patentapplication will be published by the patent authorities(albeit after a period of 18 months). If a patent application

"Formula E is quicklybecoming a catalyst forinnovation, and anopportunity to showcasethat innovation on aninternational stage."

is published and it looks like it relates to a technology thatgives a team the edge over its rivals, other teams could wellinstigate a rule change to outlaw the innovation. So, whilsta team may possess a patent right that they could licenseout to mainstream auto manufacturers, they will beprevented from using the technology on the race track.

While the licensing out the patented technology to othermanufacturers may be a lucrative tactic employed in manyinnovative industries, it seems that traditionally thedisadvantages have outweighed the benefits for motorsportteams.

Despite a novel approach to intellectual property however,motorsport continues to drive the innovation that will definethe cars of tomorrow. With their large teams of highly skilledengineers and often huge budgets, the race to deliver carsfit for the future will continue to excite, both on and off thetrack. A challenge for the industry in general, and raceteams in particular, is how they can avoid giving away theirinnovative technology for free.

Robert [email protected]


IntellectualProperty ina 'no-deal'Brexit:what canwe expect?While a draft Brexit deal is now on thetable, question marks remain overwhether it can be delivered. As such,the sensible course of action forintellectual property rights ownersremains to plan for a potential 'no-deal'Brexit. The UK government recentlypublished a number of technicalguidance notes covering the economicconsequences of a no-deal Brexit, thatis, a departure of the UK from the EU on29 March 2019 without an agreement onthe terms of the withdrawal beingconcluded with the EU. The UKgovernment stresses that it expects toconclude a deal, in which case therewill be a transitional period lasting to 31December 2020 during which nothingsignificant will change, so far asintellectual property rights areconcerned. The guidance includesnotes concerning the intellectualproperty regime that will apply in a no-deal scenario.

Patents

Basic patent law will not change following Brexit.However, EU law governs the regime for supplementaryprotection certificates (SPCs) for pharmaceutical productsand agrochemicals in the UK. If there is ‘no deal’, therelevant EU legislation will be retained in UK law. Further,any existing rights and licences currently in force in the UKwill remain in force post-Brexit. It is not anticipated thatthere will be any significant changes to the legalrequirements or the application process concerning SPCs.The UK’s SPC regime might over time vary from that in theEU but that would require new legislation that wouldpresumably be preceded with full consultation ofstakeholders.

The Unified Patent Court (UPC) is not yet established andis dependent on ratification of the Unified Patent CourtAgreement by Germany (which itself is dependent on theoutcome of an ongoing constitutional challenge). It iscurrently unknown whether the UPC will be operationalbefore Brexit day, i.e. 29 March 2019. Even in a ‘no deal’situation, the UK is committed to exploring whether it willbe possible to participate in the UPC and unitary patentsystem. It is worth noting that the UK ratified the UnifiedPatent Court Agreement in April of this year, i.e. afterhaving started with EU withdrawal process, whichindicates that continued participation in the UPC isconsidered by the UK government to be politicallyacceptable, notwithstanding the fact that the UPC isrequired to apply relevant EU law in its decisions. If the UKis prevented from being involved with the UPC and unitarypatent then patent protection and enforcement in the UKwill continue just as it does now.

Trade Marks & Designs

EU Trade Marks (EUTMs) and Registered CommunityDesigns (RCDs) are governed by EU Regulations. In theevent that there is ‘no deal’, the Government will ensurethat the rights in existing EUTMs and RCDs will continueto be protected and enforceable in the UK. This shall beachieved by providing an equivalent trade mark or designright registered in the UK.

Unregistered Community Designs (UCDs) are alsogoverned by EU Regulations. Similarly, if there is ‘no deal’the government will ensure that all UCDs which exist atthe point of exit will continue to be protected andenforceable in the UK. Additionally, the UK plans to createa new ‘supplementary unregistered design right’ which willbe the equivalent of the UCD in the EU.

CopyrightMuch of the UK’s copyright law has its roots in internationaltreaties and is not dependent on membership of the EU.

However, there are certain aspects of current UK copyright lawwhich are derived from EU directives. These will beincorporated into UK law on Brexit so will not change, at leastin the short term. One exception is sui generis database rights– following a no-deal Brexit, databases created in the UK areunlikely to qualify for database right protection under EU law.Certain broadcasting rights will be affected too. With theexception of such aspects, copyright law in the UK will belargely unchanged post-Brexit if there is ‘no deal’.

"In the event that there is ‘nodeal’, the Government willensure that the rights inexisting EUTMs and RCDs willcontinue to be protected andenforceable in the UK. Thisshall be achieved by providingan equivalent trade mark ordesign right registered in theUK."

Geographical food & drink names

Currently, food and drink manufacturers can protect thenames of their products under EU Geographical Indication(GI) Regulations (Stilton cheese for example). FollowingBrexit, the Government shall set up its own GI schemewhich will mirror the existing EU system. The precisedetails of the new UK scheme will be explored through apublic consultation. It is currently anticipated that allcurrent UK GIs will continue to be protected under the EUschemes. If this is not the case, UK producers will need tosubmit applications to the European Commission as ‘thirdcountry’ producers.


Exhaustion of intellectual propertyrightsThe current position is that intellectual property rights areconsidered to be ‘exhausted’ once a product has beenplaced on the market in the European Economic Area(EEA) with the right-holder’s consent. In a ‘no deal’scenario the UK will provisionally and unilaterally continueto recognise the EEA exhaustion scheme. TheGovernment will then consider options for and consult onthe long-term future for the exhaustion of intellectualproperty rights in the UK. Accordingly, we do not anticipateany changes to the position for the importation of goodsinto the UK post-Brexit in the short term. However, itshould be noted that this is an asymmetric arrangement.For the remaining EU/EEA members, the UK will have leftthe EEA (in a ‘no deal’ scenario) on 29 March 2019,meaning that goods placed on the market in the UK willnot be treated as having exhausted intellectual propertyrights in the EEA. There may therefore be restrictions onexporting goods from the UK to the EEA. (GBH/TT)

Life sciences

Regarding the life-sciences sector, the Government’snotices include updates on the regulation of medicines,medical devices and clinical trials, submitting regulatoryinformation on medical products and batch testingmedicines in the event of a no-deal Brexit.

The notice outlines how the UK plans to deal withMarketing Authorisations (MAs). Current granted EUCentralised MAs will be converted into UK MAs via agrandfathering procedure. Centralised MAs which havebeen submitted but have not yet been granted will need tobe resubmitted as a UK MA, but the UK has suggested theMHRA will take EU Committee for Medicinal Products forHuman Use (CHMP) opinions into account.

The notice states that the UK is not proposing anychanges to the data and market exclusivity periods for UKMAs. Importantly, it states that under a no-deal scenariothe start of data or market exclusivity will be the date of

"In relation to parallel imports,the technical notice states thatin the event of a no-deal Brexit,the UK will unilaterally align tothe EU/EEA exhaustion regimeon exit day to providecontinuity in the immediateterm for businesses andconsumers."

authorisation in the EU or UK, whichever is earlier. Thismay have an important impact on the term of data andmarket exclusivity available in the UK because in the eventthat a pharmaceutical company receives EU MA approvalfaster than UK MA approval, it appears the earlier EU MAwill trigger data and market exclusivity in the UK,irrespective of when the later UK MA is granted. Such anapproach may be designed to incentivise pharmaceuticalcompanies to apply for a UK MA early.

In relation to paediatric medicines and orphan medicines,the technical notice states these provisions will be subjectto consultation. As such, it is possible that the currentpaediatric extensions and orphan market exclusivityregimes available in the UK may be affected.

In relation to parallel imports, the technical notice statesthat in the event of a no-deal Brexit, the UK will unilaterallyalign to the EU/EEA exhaustion regime on exit day toprovide continuity in the immediate term for businessesand consumers. The notice flags, however, that the UKhas not decided how to manage exhaustion of rightslonger term but states that any substantial changes to theexhaustion regime will occur only after a full researchprogramme and consultation.

Data protection

Currently, the rules which govern the collection and use ofpersonal data are set at an EU-level by the General DataProtection Regulation (GDPR). In the UK, the DataProtection Act 2018 (which came into force on 25 May2018) incorporates and supplements the standards set outin the GDPR and ultimately provides for a comprehensivedata protection framework.

The GDPR itself states that organisations are free totransfer personal data within the EU however are onlypermitted to transfer personal data outside of the EU ifthere is a legal basis for doing so.

At the beginning of this year, the House of CommonsDigital, Culture, Media and Sport (DCMS) Committeehighlighted in its report that retaining the ability to transferdata across EU borders is a fundamental issue to manyUK technology businesses.

The report stated: “The success of the UK’s digitaleconomy is underpinned by ongoing data transfer acrossthe globe and particularly within the EU […] It is importantto recognise that Brexit creates a potential risk that theUK’s ability to transfer data across borders will be limited”.

Bearing this in mind, what would all of this mean for theUK should there be no deal?

"The GDPR itself states thatorganisations are free totransfer personal data withinthe EU however are onlypermitted to transfer personaldata outside of the EU if thereis a legal basis for doing so."

The UK government has confirmed that should the UK leavethe EU with no agreement in place regarding futurearrangements for data protection, there would be noimmediate change in the UK’s own data protectionstandards. This is because the Data Protection Act 2018would remain in place and the EU Withdrawal Act wouldincorporate the GDPR into UK law to sit alongside it.

The UK government has confirmed that should the UKleave the EU in March 2019 with no agreement in placeregarding future arrangements for data protection, therewould be no immediate change in the UK’s own dataprotection standards. This is because the Data ProtectionAct 2018 would remain in place and the EU WithdrawalAct would incorporate the GDPR into UK law to sitalongside it.

Albeit the free flow of personal data from the UK to the EUwould largely be unaffected following a no deal scenario,the issue arises in the converse; where personal data istransferred from organisations established in the EU tothose established in the UK, as the legal frameworkgoverning such would change on exit.

The EU already has a mechanism which allows for thefree flow of personal data to and from countries outside ofthe EU. The European Commission has previously statedthat if the UK’s level of personal data protection is deemedto be effectively equivalent to that of the EU (i.e. theGDPR), it would allow the transfer of personal data to andfrom the UK without restriction.

The UK government notes in its July 2018 White Paper“The future relationship between the UK and the EU” that itbelieves the EU’s adequacy framework provides the rightstarting point for data protection arrangements betweenthe UK and the EU after Brexit. The White Paperemphasises that the UK and the EU start their extensiveagreement on the exchange of personal data from aunique position of trust in each other’s standards andregulatory alignment on data protection. It also supportsthe ongoing cooperation between the UK’s InformationCommissioner’s Office and EU Data Protection Authorities.

However, given that the granting of any such “adequacydecision” is not certain, the DCMS suggests in its


guidance published on 13 September 2018 that it is worthconsidering an alternative legal basis for the processing ofpersonal data; namely, the use of standard contractualclauses. In short, this means that by including any modelEuropean Commission pre-approved data protectionclauses within your contracts with EU customers (andensuring that their respective customers enter into thesame) you would have the required lawful basis to transferpersonal data to and from the EU following Brexit.

Community Plant Variety Rights(CPVR)

"While this notice sets outthe bare bones of theimplications of a no-dealBrexit on plant breedersrights, the finer details haveyet to be considered."

In the event of a no-deal Brexit, granted CPVRs held byUK businesses in March 2019 will continue to have effectin the remaining 27 EU member states, and will beautomatically recognised and protected under the UKPlant Varieties Act. The guidance stresses that no actionwill be required by CPVR owners to convert this right.

Any pending CPVR applications that are not granted by 29March 2019 will not be extended to cover the UK. As such,any breeders wanting coverage in the UK will need tomake a separate application for a UK PVR to be examinedunder UK legislation. The UK application must be filed withthe Plant Variety Rights Office (PVRO) and will be subjectto the usual criteria – that is, the variety must be new andmust also pass the DUS (distinct, uniform and stable)testing, which will be carried out by NIAB. It is unclear howthe PVRO will deal with existing CPVR applications wherethe variety has already been sold post CPVR applicationbut before application for a UK PVR. It would make sensefor the application date of the CPVR to be treated as theUK PVR application to avoid any potential novelty issues,yet the guidance makes no comment on this point. Assuch, it may be wise for rights holders to start reviewingtheir current filing strategy and consider concurrently filingfor CPVR and UK PVRs going forward.

Post March 2019, to obtain the same geographicalcoverage as pre-Brexit two separate applications will berequired – a CPVR and a UK PVR application. While thiscarries an obvious cost implication for breeders, theguidance sets out that APHA are reviewing their processeswith the aim of reducing their fees. One suggestionappears to be to accept DUS results from EU memberstates. On the flip side, it seems that the Community PlantVarieties Office will not accept the results of UK DUStesting.

Breeders wishing to market their new variety in both theEU and the UK will need to separately apply for listingin the EU Common Catalogue and the UK NationalListing. In terms of certification, the guidance discussesthat the UK would apply for its certification processes tobe considered as a “third country recognised by the EUas equivalent for seed certification”.

For varieties that are however already registered on theEU Common Catalogue but are not on the UK NationalListing, the UK government will automatically add theseto the UK list for a period of two years after a no-dealBrexit.

While this notice sets out the bare bones of theimplications of a no-deal Brexit on plant breeders rights,the finer details have yet to be considered. If, on theother hand, agreement is reached between the UK andthe EU regarding the terms of the UK’s withdrawal fromthe EU, then CPVRs will continue to operate in the UKjust as they do know, at least until the end of thetransitional period that is proposed to operate until 31December 2020.

Graham [email protected]

Contact our Brexit expertsBrexit lead

Life SciencesSteven [email protected]

Data ProtectionRayyan [email protected]

Community Plant Variety Rights

Andrea [email protected]

Trade MarksTom [email protected]


The UK’simplementation ofthe EU Trade MarksDirective 2015Maya [email protected]

Due to be implemented by the United Kingdom by 14 January 2019, the EUTrade Marks Directive 2015/2436 aims to further harmonise the national trademark laws of EU member states. To help prepare for the changes, the UKIntellectual Property Office has published guidance on the changes expected,mainly to the Trade Marks Act 1994 (TMA) and the Trade Marks Rules 2008.These changes have been made through the Trade Marks Regulations 2018(TMR), and an amended Trade Marks Act has also been made available toillustrate the changes. The key changes are summarised below.

1. Applying for trade marks

1.1 Removal of requirements for “graphical representation”of trade marks

The removal of this requirement aims to allow trade-marksto be represented in the widest range of digital file formatspossible under the current system. Trade markapplications for sounds, multimedia content, animationsand holograms can be represented in MP3 and MP4formats. Such applications will have to be filed online; theUKIPO will not accept paper applications accompanied byUSB sticks, CDs or floppy disks!

However, it must be noted that if relying on a UKapplication/registration as a basis for an InternationalRegistration, a graphic representation of the mark soughtwill still be required. The World Intellectual Property Office(WIPO) which administers international registrations doesnot currently accept trade mark representations inelectronic formats, such as MP3 and MP4.

1.2 Objections based on technical function

Under the current regime, a trade mark consistingexclusively of a shape can be refused registration if thatshape itself performs a technical function, adds value tothe goods or results from the nature of the goodsthemselves. The Directive has extended this prohibition toalso cover characteristics other than shape. It will bepossible to refuse a trade mark consisting exclusively ofany characteristic which is intrinsic to those goods, whichperforms a purely technical function, adds value to thegoods or results from the nature of the goods.

An example of such a characteristic would be in the caseof the doorbell sound being registered for door bells. Thesound is an intrinsic characteristic of the doorbell, and thusthe application is likely to face objections. Although, it is abroadening of this ground of objection, it should still onlyaffect a relatively small proportion of marks as it relates tothe intrinsic nature of the mark itself.

1.3 Earlier rights and Search Reports

The UKIPO will continue to notify applicants of earlier trade-marks it finds to be potentially conflicting with the Applicant’smark. However, it will cease to notify Applicants of earliertrade-marks which will have lapsed at the date of filing.

This appears to leave a blind spot for Applicants as it ispossible for a lapsed trade mark registration to be renewedwithin the 6 month grace period after expiry or the additional 6month period allowed for restorations and then be relied uponto challenge an application. To counter this, a furtheramendment has been made to the relevant provisions. Anyuse of the Applicant’s trade mark during the period in which theearlier mark had lapsed will not amount to infringement, aslong as such use commenced in good faith.

1.4 Proof of use and Oppositions

The relevant date from which the proof of use period is to becalculated has been amended from the date of publication tothe date of filing (of the opposed application) or to the prioritydate if such a claim exists.

2. Trade mark disputes

2.1 Goods in transit

Currently, trade mark owners believing that counterfeitgoods bearing their trade-marks are being exportedoutside the EU (via the UK) can request these goods bedetained by customs. Under the current regime, the trademark owner has to prove that he is the right holder of thetrade mark in question for the goods to be detained.However, the Directive has transferred the burden of proofto the exporter; who will have to show that the purportedowner of the rights does not in fact own the rights inquestion.

2.2 Infringements: more options for taking action

The implementation of the Directive has also broughtchanges to infringement provisions. These have beenextended to provide additional options in regards to takingaction against those preparing packaging, labels and othermaterials to be used on counterfeits bearing a registeredtrade mark. Some of the changes include:

- The right to take action in relation to a wider range ofitems used for counterfeiting

- The right to take action ‘where the risk exists’ that theitems could be used in relation to goods and services.

- The right to take action even when the producer of theitems (packaging, tags etc.) is unaware that he is actingwithout authorisation.

2.3 Trade Marks in dictionaries

A new Section will allow trade mark owners to requestpublishers to correct dictionaries which wrongfully identifya trade mark as a generic term.

2.4 Trade Marks registered in the name of an agent orrepresentative

Owners of trade-marks are currently able to challenge theregistration of their trade mark in the name of an agent orrepresentative who has acted without authorisation. TheDirective has brought changes which allow a trade markowner to challenge such registrations whether they arebased in the UK or abroad.

2.5 Infringement by registered trade mark

At present, use of a registered trade mark cannot infringeanother registered trade mark. As such, a proprietorbelieving another party is infringing its trade mark cannot

1.5 Collective marks

There will be a change in the definition of who can own acollective mark, which at present can only be held by‘associations.’ The definition shall now include “legal personsgoverned by public law” which will allow a broader range oforganisation to hold collective marks. Charter and statutebased organisations, co-operatives and other organisationswith structures similar to associations may now be able toapply for collective marks. Individuals remain unable to applyfor collective marks.

The regulations which govern collective marks must nowinclude sections relating to the conditions of use of the mark.Further, if the collective mark includes any references to ageographical area, the regulations must allow all personswhose goods or services originate from that area and whosatisfy all the conditions of the regulations to use the mark.

"The UKIPO will continue tonotify applicants of earliertrade-marks it finds to bepotentially conflicting withthe Applicant’s mark.However, it will cease tonotify Applicants of earliertrade-marks which will havelapsed at the date of filing."


"Currently, trade mark ownersbelieving that counterfeitgoods bearing their trade-marks are being exportedoutside the EU (via the UK)can request for these goodsbe detained by customs.Under the current regime, thetrade mark owner has to provethat he is the right holder ofthe trade mark in question forthe goods to be detained."

Defences against infringement

2.6.1 Own name defence

Using an existing company’s name is now included in thelist of infringing acts. In turn, the ‘own name’ defence(against infringement) will now only apply to personalnames and not company names. Although, these changeswill not apply retrospectively, it is possible that continuingto use a company name which falls foul of theaforementioned sections after they come into force mayconstitute trade mark infringement.

2.6.2 Non-use as defence in infringement proceedings

To avoid the need to bring parallel revocation proceedingswhen faced with an infringement action (where theinfringed mark is vulnerable to non-use revocation), adefendant will now be allowed to request the owner of theearlier mark to prove his mark is valid by providing proof ofuse. Failure to prove such use will result in theinfringement action being dismissed.

2.7 Invalidation proceedings – proof of use

Currently, to cancel a trade mark registration on the basisof an earlier mark, the challenger/applicant for cancellationwill be required to show that the mark it relies on has beenput to genuine use in the 5 year period immediatelypreceding the application for cancellation. However, underthe new regime, it may be possible to request the

succeed in an infringement action until the allegedlyinfringing mark is officially cancelled. The new Directiveallows the court to consider cancellation issues during theinfringement proceedings. Proprietors no longer need tobring separate cancellation actions before or alongsideinfringement actions. This amendment should reducecosts and the time spent on these types of matters.

challenger to prove use for an additional, separate 5 yearperiod.

If the earlier mark has been registered for a relatively longtime (at least 10 years), the owner of the challenged markwill be able request that the challenger prove use for the 5year period preceding the filing date of the challengedmark (or priority).

3. Trade marks after registration

Licensing

3.1.1 Action under trade mark law

The Directive has brought changes relating to howlicensors can challenge licensees who are not compliantwith the terms of a license. Licensors could only bringaction regarding such breaches under contract law butnow it is possible to also bring an action under trade marklaw.

3.1.2 Action by licensee

At present, it is possible for licensees to bring actionagainst a potential infringer. The Directive brings changesto how this can be done, and it depends on whether thelicence is exclusive or non-exclusive.

Exclusive licensees can bring action but must give thetrade mark owner the opportunity to do so themselves orgive their permission. Should the licensor refuse or fail togive permission within two months, the licensee canproceed. Non-exclusive licensees cannot bring actionagainst a third party except with the permission of thelicensor.

3.1.3 Licensing before registration

All licensing provisions now apply to trade markregistrations as well as applications.

3.2 Division of trade mark registrations

A new rule will be implemented which will specify thatlicences, security interests and disclaimers recordedagainst an existing registration will apply to eachsubsequent divisional. However if any if theseencumbrances do not apply to a particular divisional, arequest can be made for them to be removed.

3.3 Renewal of registrations

Currently, the UKIPO sends renewal reminders about 4months before renewal becomes due. This will change to6 months following the amendment of Rule 34(1).

3.4 Restoration of trade mark registrations

A trade mark owner who does not renew their trade markregistration on time has the opportunity to restore it up to12 months after the date of expiry. This remainsunchanged under the Directive. However, the UKIPO willno longer consider whether it is “just” to restore the trademark, but whether the failure to renew was “unintentional”.This means the UKIPO will no longer take other trade-marks into account in considering whether it will restorethe registration.

Conclusion

The deadline for the implementation of the EU TradeMarks Directive is 14 January 2019 and the changes itbrings shall only have effect after this date. A number ofthese changes will have been anticipated as they havealready been implemented into EU Trade Mark Law andwill be uncontroversial. However, others, such as theremoval of the own name defence for companies mayprove to be controversial as it is not clear how the courtswill address the issue of long standing companies whocontinue to use names which, after 14 January 2019 fallfoul of the new infringement provisions.

"A number of these changeswill have been anticipated asthey have already beenimplemented into EU TradeMark Law and will beuncontroversial. However,others, such as the removal ofthe own name defence forcompanies may prove to becontroversial..."


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Business Intelligence is a newsletterproduced by Marks & Clerk. Articlesfeatured are intended to provide asummary of the subject matter only.Readers should not act on any informationwithout first obtaining specialistprofessional advice. Copyright Marks &Clerk Properties Limited, November 2018.

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Documents

Business Intelligence Q4 2018 / Business Intel Q4 document€¦ · Business Intelligence Q4 2018 In its annual update of the “Guidelines for Examination”, the European Patent