Following up on the article published in our Newsletter of December 2006, here is a brief analysis of the decision rendered by the Supreme Court on April 30, 2007 in the KSR v. Teleflex case and how it may impact future drafting and prosecution of patent applications.

This decision is based on a case that has seen many discussions and debates regarding the criteria of obviousness in the USA. The patent was first found invalid by the district court, then valid by the CAFC (Court of Appeals for the Federal Circuit). The case was then taken up by the Supreme Court, which confirmed the decision of the district court and stated that the CAFC erred in its appreciation of obviousness.

Contrary to its practice, the Supreme Court did not provide a new test or a new standard for judging obviousness. Instead, the Supreme Court confirmed the Teaching, Suggestion, Motivation test (TSM test) as recited by the “classic” 1966 Supreme Court decision in Graham v. John Deere.

According to the Supreme Court, the CAFC erred in its application of the TSM test. More precisely, the Supreme Court stated that:

“the Federal Circuit addressed the obviousness question in a narrow, rigid manner that is inconsistent with §103 and this Court’s precedents”. (emphasis added)

Regarding the motivation to combine, i.e. the conditions under which two references can be combined, the decision condemns the CAFC’s method of relying only on subject matter and explicit teachings in the prior art. On the contrary, the Supreme Court indicated that:

“Any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.” (emphasis added)

It is interesting to note that the Court’s language no longer refers to the “motivation to combine” but to “a reason for combining.”

The Supreme Court essentially stated that if motivation to try a combination can be shown, this was enough to render the patent obvious:

“The Federal court erred in concluding that a patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try.” (emphasis added)

The “motivation to try” test also raises the question of the predictability of the invention. On this ground the Supreme Court made it clear that a predictable invention, i.e. where familiar elements lead to no more than predictable results, is unlikely to be patentable.

“If a person of ordinary skill in the art can implement a predictable variation, and would see the benefit of doing so, §103 likely bars its patentability.” (emphasis added)

“[I]f a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond that person’s skill.” (emphasis added)

Another point worth mentioning in this Supreme Court decision is that although the TSM test has been confirmed, it is not to be considered as the only test for determining obviousness. The Court is:

“(…) against confining the obviousness analysis by a formalistic conception of the words teaching, suggestion, and motivation (…)”. (emphasis added)

At the present time, we do not know what other tests may be used. This may well depend on the applicants’ and their lawyers’ creativity! However, so called “secondary considerations,” such as commercial success and the like, can and probably will be widely referred to.

Although some “EPO-like” terms were used during the oral hearing, the Supreme Court itself did not use such terms. Indeed, the Supreme Court indicated that the combination of two prior art documents could be motivated by “any need or problem.” This holding, if applied literally, could lead to even a tougher obviousness standard in the USA than in Europe.

In view of the Supreme Court’s decision the CAFC will have to change its method of determining obviousness. It will be interesting to analyse forthcoming decisions from the CAFC in order to fully evaluate the extent of this change, which we consider as being a very high standard for obviousness.

One thing is certain: applicants and patentees must be ready to put up a fight every time prior art documents are combined to challenge patentability, whether in the USPTO or in court, since the Supreme Court stated that:

“ (…) the results of ordinary innovation are not the subject of exclusive rights under the patent laws.” (emphasis added)

Les promotions sur les marques se multiplient tout au long de l’année et atteignent leur apogée pendant une période très attendue des fashionitas : Les soldes.

Deux fois par an, pendant six semaines, leurs sens sont mis en éveil pour chasser les plus belles affaires.

A l’heure actuelle, les dates de soldes sont fixées dans chaque département par le préfet et peuvent être différentes d’un département à un autre.

Légalement, il s’agit de ventes accompagnées ou précédées de publicité et annoncées comme tendant, par une réduction de prix, à l’écoulement accéléré de marchandises en stock (article L 310-3 du Code du Commerce).

Les soldes ne peuvent porter que sur un stock prédéterminé et non renouvelable, dont le vendeur aspire à se défaire en un temps réduit, en dehors de toute perspective de réapprovisionnement en produits identiques.

Dans le cas contraire, l’opération de promotion ne pourra pas être qualifiée de soldes et le commerçant qui aura utilisé indûment de ce terme pourra être puni d’une amende de 15 000 euros.

Les soldes ne peuvent par ailleurs porter que sur des marchandises proposées à la vente et payées depuis au moins un mois à la date de début de la période de soldes considérée.

La pratique qui consisterait à faire croire qu’un produit est en soldes alors qu’il n’a jamais été vendu à un prix supérieur est donc interdite.

Les commerçants doivent tenir à la disposition des services de contrôle les documents attestant qu’ils se sont conformés à cette obligation.

La pratique consistant à proposer des soldes privés avant la période officielle de soldes est également interdite.

D’ailleurs, même si le qualificatif de « soldes » n’est pas employé, les promotions ayant lieu quelques jours avant les soldes, dès lors qu’elles portent sur un stock prédéterminé et non renouvelable et même si les réductions sont inférieures à celles qui seront appliquées par la suite, peuvent être requalifiées de soldes et, par conséquent, interdites puisqu’effectuées en dehors des périodes autorisées.

La conformité de telles ventes est appréciée au cas par cas, en fonction de l’étendue de la publicité qui en est faite. Cette publicité doit s’adresser uniquement à une clientèle restreinte pour que la vente puisse être autorisée. Une publicité adressée à l’ensemble du fichier clientèle et proposant des ventes privées à prix réduit juste avant la période de soldes a donc toutes les chances de correspondre à une opération illicite.

A l’occasion de soldes remplissant toutes les conditions légales sus exposées, le commerçant peut revendre des marchandises à perte, à savoir, à un prix inférieur à leur prix d’achat effectif, ce qui est, hors ces périodes de soldes, interdit.

La législation sur les soldes s’apprêtait toutefois à être quelque peu modifiée.

En effet, un projet de loi en faveur des consommateurs a été déposé à l'Assemblée Nationale le 8 novembre 2006. Ce projet prévoit d'uniformiser les périodes de soldes sur l’ensemble du territoire. Les soldes d’hiver débuteraient le deuxième mercredi de janvier et les soldes d’été le dernier mercredi de juin. Certaines dérogations pourraient toutefois être prévues dans certains départements pour tenir compte du caractère saisonnier de l’activité des commerces qui y sont localisés.

Il crée par ailleurs un régime particulier pour la vente de produits en fin de série. Ces ventes sont définies comme étant des « ventes accompagnées ou précédées de publicités exclusivement à l’intérieur du point de vente et annoncées comme tendant, par une réduction de prix, à l’écoulement accéléré des marchandises, dont le stock ne peut être reconstitué car ces produits ne répondent plus à la demande générale en raison de l’évolution de la mode ou de l’apparition de perfectionnements techniques ».

A condition qu’il n’en soit pas fait de publicité à l’extérieur du magasin et que les marchandises ne soient pas revendues à perte, les magasins pourraient vendre leurs fins de séries en dehors des périodes officielles de soldes.

Toutefois, le 30 janvier 2007 ce projet a été retiré de l'ordre du jour de l'Assemblée Nationale et pourrait ne jamais être voté.

Les fashionitas continueront donc d'attendre les soldes….

Bérénice DEJARDINS


N’hésitez pas à nous contacter pour toute question relative aux soldes et en général toute question relative aux méthodes de ventes de vos produits ou services.
Pôle Droit de la Consommation – dejardins@plass.com

In today’s business world, companies are constantly experiencing modifications in both the scope and organisation of their legal entities, whether through merger, partial contribution of assets, assignment, licence or change of legal status. In addition, marketing and organisational plans often generate new trade names and / or addresses.

Such modifications have a direct impact on the ownership of property rights such as patents, trademarks and designs. These modifications must, by law, be notified to the relevant National Office to be published on a Register, an operation known as recordal of an agreement.

Recordal of an agreement puts third parties on notice of the change in ownership, thus allowing enforceability of the IP rights against them. For instance, Art. 17(6) of EC Regulation n° 40/94 on the Community trade mark indicates that: “As long as the transfer has not been entered into the Register, the successor in title may not invoke the rights arising from the registration of the Community trade mark”.

Day to day practice shows that companies consider this administrative operation as a costly burden without, or with at most marginal, consequences.

However, recent French case law has held that not proceeding with recordals in due time can have considerable financial impact.

We will review successively some case law on transfer of ownership (I) and then on licences (II) to conclude with some practical tips.


I – Transfer of ownership

Generally, contracts clearly define the transferred IP rights and other compulsory mentions such as the financial aspects of the transaction.

Sometimes, particularly in the situation where there is only a partial contribution of assets, the contract does not provide a detailed list of all the patents, trademarks and designs concerned by the transfer of ownership, but simply limits the list of transferred assets to the main ones such as buildings, branch of activity, etc. Parties must then define the transferred IP rights during the recordal.

In a decision dated January 10, 2007, the French Tribunal de Grande Instance (TGI) de Paris (1) had to decide in such a case where a patent was not explicitly listed in a partial contribution of assets. The parties had recorded the patent transfer at the French patent office.

The judge considered that the recordal of the patent transfer was not in itself sufficient legal proof of actual transfer of ownership but that the patent was correctly transferred since it necessarily pertained to the transferred branch of activity.

To reinforce the idea that all transferred IP rights must be explicitly listed in a transfer agreement, we refer to a second decision (2,) dated February 7, 2006, of the French Cour de Cassation (French Supreme Court) which decided that a transfer agreement (in this case, a transfer after bankruptcy) not containing an explicit reference to an IP right meant that is the right was not transferred.

Another difficulty may arise in case of an important time lapse between the execution of the agreement and the recordal request. For instance, in a merger, the previous owner (which no longer legally exists after the merger) cannot request the recordal of the IP rights concerned by the merger more than 10 years later! (3). Therefore, the successor in title has no rights to assign a third party for infringement.

Furthermore, it should be noted that in case of IP rights sold fraudulently by their owner to different purchasers, the IP rights will be finally owned by the purchaser who is the first to proceed with the recordal of the transfer agreement at the relevant National Office.

II – Licences

To put third parties on notice, according to French and other European laws, licences must be recorded in the National Register.

Thus, in the case of Community Trademarks the Regulation states : “Legal acts referred to in Articles 17 [transfer], 19 and 22[license] concerning a Community trade mark shall only have effects vis-à-vis third parties in all the Member states after entry in the Register” (EC Reg. 40/94).

This is equally true for patents. For instance, in France, when a license is not recorded, an exclusive licensee cannot serve a writ to any third party, and cannot join an infringement trial started by the patentee (4).

The importance of the recordal for a licensee must not be underestimated. Even if it may sometimes be possible to accomplish the recordal after starting a suit, the date of the recordal is the starting date for calculating damages (decision (5) of TGI de Paris, February 9, 2005).

When the same judgement decides that the exclusive distributor may request damages for passing-off due to the simple fact of sales of counterfeiting products, we may wonder if the licensee is not in a less favourable position than the exclusive distributor.

Indeed, today and at least in France, the licensee can only request damages at the level of his prejudice as the exclusive distributor.

The implementation of “Directive 2004/48/CE of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights”, allowing the possibility to calculate damages based on the profit made by the infringing party or on a special royalty rate may alleviate at least partly the drawback of the obligation to record a licence by opening the way to further damages.


Conclusion:

The recordal operation is an important one and may directly impact the financial status of a Company.

Managing the ownership of IP rights in an organized and timely fashion will help prevent costly consequences in the case of litigation.

This management may be based on the following rules:
- An agreement which concerns an IP right must explicitly refer to it and to all relevant details: countries, priority, extensions, etc. This often requires intervention by a specialized IP attorney.
- Define in the agreement who is in charge of the recordal operation. A rule of thumb suggests defining the party who has the greatest interest in the success of the operation, i.e. the successor in title or the licensee.
- For operations in which the IP rights stay in the same (group of) companies (change in a legal name or address, transfer to a subsidiary, etc.), analyse in a first step the IP rights portfolio to define those which may be subject to litigation due to their economic value. For this small subset of IP rights, proceed without delay with the recordal operation. For the rest of IP rights, depending on the budget, the recordal operation may be deferred, but it is absolutely necessary to safely store all documents needed for the recordal.

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(1) TGI Paris, January 10 2007, 3ème ch. 3ème sect., SAS Soule c. SA Indelec
(2) Cass. Com., February 7, 2006, Prop. Ind. mai 2006, com n° 41, p 13
(3) Cass. Com., March 14, 2006, PIBD 830. III.347
(4) An exclusive license of a European patent was not recorded in the European Patent Register. The patentee had a writ issued against a third party, the licensee wanted to join the trial and the potential infringer knew of the existence of the licence agreement. The judge decided that the private knowledge of the license agreement by the potential infringer was not sufficient to oppose the license to him. Only a recordal on the European Patent Register would allow a licensee to join the trial.
Cass. Com., 7 juillet 2006, Prop. Ind. avril 2006, com n° 28, p 16
(5) TGI Paris, February 9, 2005, PIBD 809. III.335

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This article was previously published in Manual Intellectual Property - IP Handbook 2007

Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004, amending Directive 2001/83/EC on the Community code relating to medicinal products for human use, was implemented in France on February 27, 2007 (sixteen months after the Official deadline, October 30, 2005), amending the French Public Health Code (PHC) and the French Intellectual Property Code (IPC).

The most expected amendment was certainly the implementation of the so-called “Bolar” clause, for which a new paragraph (d) in Article L.613-5 IPC has been added. This new paragraph (d) reads as follows: “The rights afforded by a patent shall not extend to […] d) Studies and trials required for obtaining a marketing authorisation for a medicinal product, as well as to the acts necessary for their performance and for obtaining the authorisation”. In this regard, one should note that the draft was initially limited to intra European Economic Area (EEA) marketing authorizations, but that limitation has now been removed. The draft was however never limited to generics.

Concerning amendments to PHC, two amendments relate to new definitions for generics and biosimilar medicines. According to new article L.5121-1(5) PHC, a generic speciality of a reference speciality is defined as something that “has the same qualitative and quantitative composition in active substances, the same pharmaceutical form, and for which the bioequivalence with the reference speciality has been demonstrated by appropriate biodisponibility studies”. In addition, and according to new Article L.5121-1(15) PHC, a “biosimilar medicine” is defined as a “biological medicine with the same qualitative and quantitative composition in active substance and with the same pharmaceutical form of a biological medicine of reference, but which does not comply with conditions foreseen in paragraph 5° of the present article to be regarded as a generic speciality, in reason of differences such as the variability of raw material or of the processes of manufacture and requiring the publication of further preclinical and clinical data”.

Elsewhere, the new article L.5121-10-1 PHC, provides that a generic speciality should not be marketed before the expiration of a period of 10 years after the grant of the reference molecule Marketing Authorization (MA). This period is extended to 11 years if, during the first 8 years following the grant of the MA for the reference molecule, the owner obtains a MA for another new therapeutic indication, said indication providing an important clinical benefit to the patient. Another major amendment concerns new fourth paragraph of Article L.5121-10 PHC, which makes it compulsory for the generic MA owner to inform the General Director of AFFSAPS (the French Drug Administration) of the indications, pharmaceutical forms, and dosages of the reference speciality for which industrial property rights are in force.

In conclusion, it should be mentioned that French Legislator sought to maintain a balance between the patent owner’s rights and those of the generic maker: the necessary studies and trials to obtain a MA for a generic of a patented medicine are now allowed in France, but, at the same time, a generic speciality should not be marketed until 10 or 11 years after the grant of the reference molecule Marketing Authorization.